Bank stocks take a beating as Fraud in PNB widens

Mumbai: The shares of public sector banks were battered badly on Tuesday after scam hit PNB made fresh disclosure saying the amount of fraudulent transaction could be Rs 1,300 crore more than the current estimate of Rs 11,400 crore.

While the shares of PNB crashed 12.90 per cent, the shares of other state lenders too suffered investors wrath with Bank of India and IDBI Bank tanking 7.82 per cent and 5.89 per cent respectively. The shares of Canara Bank, Indian Bank, Union Bank and Syndicate Bank were also hammered down ending the day with deep losses in the range of 3-5 per cent.

“The markets are little suspicious about the kind of processes being followed in PSBs. Investors feel that if such a massive fraud could continue undetected at PNB similar incidents could also surface in other state-owned banks. That is why any reports about an incident of fraud in one bank is triggering a collapse in entire PSU bank stocks,” said Ambareesh Baliga, senior research analyst.

However, he believes that the recent steep correction in the bank stocks have given a very good opportunity for long-term investors.  

“Till now, banks were cleaning up their NPA mess. They have now started cleaning and strengthening their processes as well which is very healthy for the entire sector,” he added.