Rs 1,374 crore vanished in 3 days! LIC takes biggest hit in PNB’s free fall
A steep 40 per cent drop in the Punjab National Bank's stock in the last three days weighed heavy on its largest shareholder, Life Insurance Corporation of India (LIC).
LIC suffered a notional loss of as much as Rs 1,374 crore in the last three sessions since February 14.
LIC, the biggest 'public shareholder' in PNB, holds 13.93 per cent stake in the bank, followed by HDFC Trustee Company Limited (4.2% stake) and Lazard Emerging Markets Equity Portfolio (2.2 per cent stake), data available with BSE for the quarter ended December 31, 2017 showed.
The state-run insurer has been hiking its stake in PNB for the last few years. Since 2011, LIC's stake in PNB has gone up from 8 per cent to 14 per cent.
LIC's stake in the bank is worth Rs 4089.76 crore today, compared with Rs 5463.72 on February 14.
Meanwhile, the market capitalisation of PNB eroded about Rs 10,000 crore from Rs 39,209 crore as on February 12 to Rs 29,400-odd crore today. The market value that PNB lost nearly equals the financial fraud PNB detected earlier this week at its Mumbai branch.
To explain the fraud in brief, PNB’s officials had issued unauthorised Letter of Undertaking (LoUs) in favour of three companies, run by billionaire Nirav Modi namely Solar Exports, Steller Diamonds and Diamond R Us for availing buyers’ credit.
PNB employees misused the SWIFT network to transmit messages to other banks bypassing the core banking system (CBS), and duping the management about the same.
On these LoUs, overseas branches of Allahabad Bank, Axis Bank, etc, credited PNB’s Nostro account, from where funds were moved to certain overseas parties. Axis Bank on Thursday clarified, saying it had sold all its LoUs before the issue surfaced and there is no financial implication relating to this case.
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