India's second largest state-owned lender Punjab National Bank reported a trading fraud to the tune of more than Rs 11,300 crore ($1.7 billion), leading to a stampede in its stocks on Wednesday.
The fraudulent transaction was reported to the Bombay Stock Exchange a week after Punjab National Bank reported earnings below expectations for the December quarter as asset quality remained under stress.
"The Bank has detected some fraudulent and unauthorised transactions (messages) in one of its branch in Mumbai for the benefit of a few select account holders with their apparent connivance," PNB said in a filing to the BSE.
"Based on these transactions other banks appear to have advanced money to these customers abroad. In the Bank these transactions are contingent in nature and liability arising out of these on the Bank shall be decided based on the law and genuineness of underlying transactions," the statement added.
Shares in Punjab National Bank slumped as much as 6 percent in early trade even as the benchmark index made gains.
"The quantum of such transactions is USD 1771.69 Mio (approx). The matter is already referred to law enforcement agencies to examine and book the culprits as per law of the land," the filing added. The bank did not name the people involved in the fraud or divulge other details.
The bank was hit with charges of fraudulent transactions last week after investigators started a probe into said billionaire jeweller Nirav Modi over accusations that he and others defrauded the bank of $44 million, Reuters reported. The report did not specify if the latest revelation was related to the same case.