The bank's stock tanked 12.15 per cent to end at Rs 75.55 on Wednesday. The bank made payments to the tune of almost Rs 6600 crore to other banks to whom it owed money on underwriting commitments with regard to the letters of undertakings that were fraudulently issued to the Nirav Modi group. The PNB had on Monday divested its two executive directors of all powers.
PNB was hit by a almost Rs13,000 crore scam allegedly perpetuated by jewellers Nirav Modi and Mehul Choksi in connivance with some bank employees.
The Delhi-based lender's earnings will be under pressure as it will have to make provisions for the scam-related payouts to other banks.
The remaining provision of Rs 7,178.42 crore will be made during the first three quarters of the ensuing financial year.
Earlier this month, the daily had reported that the Bankruptcy Court for the Southern District of NY had asked a global professional services firm, Alvarez and Marsal, to investigate the circumstances surrounding the alleged Rs 13,000 crore bank fraud involving the diamantaire-turned-fugitive.
PNB's latest loss compared with a net profit of Rs 261.9 crore a year ago was higher than a Rs 5,367.1 crore loss it reported in the March 2016 quarter that had been the highest in India's banking sector.
Punjab National Bank made provisions of Rs 20,353 crore towards bad loans in the fourth quarter ended March 2018.
Shares of PNB have been witnessing tremendous selling pressure ever since Nirav Modi fraud came into light.
PNB said it had allocated 71.78bn rupees to pay around half the amount it owes in the three months to March 31, while setting aside the other 50pc over the next three quarters. Out of this, the much talked about Nirav Modi scam accounted for about Rs 7580 crore, meaning the bank's lending moves left a lot to be desired. "Q4FY18 loss of Rs 13,400 crore and FY19 loss estimate of Rs 8,000 crore could lead to a spiral of capital-raising at low multiples", the global brokerage house said.
To ensure proper checks and balances, PNB has gone for a four-way split for loan operations and created a focused off-site centre for monitoring all foreign exchange businesses.