Corruption

Aftermath of the PNB, Rotomac frauds: Govt loses $4.6 billion in state run banks in 7 days

Chennai: The value of government investments in public sector banks has recorded a drop of Rs. 30,000 crore ($4.6 billion) in the last seven days in the wake of the PNB and Rotomac bank frauds, reported the Times of India.

According to Prime Database, since PNB announced the fraud, between the government, insurance and MF industry, the value of their holdings in the banking sector fell by Rs 44,000 crore ($6.8 billion).

ALSO READ: Nirav Modi’s letter to PNB: ‘You have destroyed my brand, my businesses, my ability to pay back’

The value of government’s holdings in PSU banks has fallen 10 per cent to Rs 2.6 lakh crore from 2.9 lakh crore.
The insurance industry, which has 5-15 per cent stake in more than 40 banks, saw the value of its holdings tanking 6 per cent to Rs 1.14 lakh crore, while MFs saw the value of their banking portfolio shrink nearly 4 per cent to Rs 1.75 lakh crore. Insurance giant LIC saw its investments in the banking sector fall 7 per cent to Rs 80,590 crore from Rs 86,583 crore.

ALSO READ: Rotomac fraud: Amount goes up to 3,695 crores, CBI files case against promoter Vikram Kothari

In PNB alone, where the government has a stake of more than 57 per cent, the value of its holdings fell 28 per cent (or Rs 6,247 crore) to Rs 16,117 crore in the last seven days. As did the value of LIC’s stake in the beleaguered public-sector bank — to Rs 3,938 crore from 5,464 crore.

In the Nirav Modi/Gitanjali Gems scam, after PNB announced that it has an exposure of over Rs 11,300 crore through LoUs, shares of other banks who had bought its LoUs in the primary and secondary market started getting hammered. Stocks of SBI, UCO Bank, Bank of Baroda, Union Bank of India, Allahabad Bank, IDBI Bank, Axis Bank, Indian Overseas Bank and others have been in a free fall.

The market rout has continued with the unearthing of the Rotomac scandal, which saw shares of banks with a loan exposure to the group being hit — such as Bank of India, Bank of Maharashtra and Oriental Bank of Commerce.


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