PNB shares are now trading 4% lower, having fallen as much as 7.8% intraday, reportedly wiping out almost Rs 3,000 crore of investor wealth in the bargain.
Natco Pharma tumbled 4.2 percent amid news of USFDA inspection at its API facility in Mekaguda, near Hyderabad.
Among individual stocks, SBI shares fell close to 4 per cent while Bank of Baroda declined 2 per cent. PNB shares ended almost 10 per cent lower at Rs 145.80.
It is feared that a spike in inflation on the back of a tightening labor market and increased government spending may push Treasury yields higher once again and send equities spiraling lower.
State-run Punjab National Bank (PNB) said on Wednesday it had detected some "fraudulent and unauthorised" transactions worth about $1.77 billion at one of its branches in Mumbai. "Based on these transactions, other banks appear to have advanced money to these customers overseas", PNB said in a notice sent to the stock exchanges on February 14.The matter has been referred to law enforcement agencies. "The quantum of such transactions is approx 1771.69 million dollars".
"So far there is no clarity on the impact on the lender's bottom line from this", said Asutosh Kumar Mishra, a Mumbai-based banking analyst at Reliance Securities Ltd.
After the bank found out about these "fraudulent" transactions, it suspended its 10 officials, including a branch deputy manager. The bank has named Nirav Modi and another jewellery company for their involvement in the over Rs 10000 crore fraud in their complaint, it is reported.
No official comments were available from the agency on the issue or the nature of the transaction. "This started in a fraudulent manner in 2011".
The finance ministry has asked, through the reform agenda circulated to the banks on 24 January, that dubious accounts should be scrutinised and appropriate action against fraudsters be taken with zero tolerance, according to PTI. This is the part of non-performing asset reforms agenda. After having recapitalised, we will ensure all banks are cleaned up.