PNB to downsize fraud-hit branch

One of the sources with direct knowledge of the matter said that PNB was transferring some employees and big accounts —each involving annual transactions of more than `500 million ($7.28 million) — to large corporate branches for “better monitoring”.

Mumbai, July 3: Punjab National Bank is closing nearly all its operations in the Mumbai branch that was at the heart of a $2 billion fraud, according to four sources.

The move to downsize the Brady House branch, which has come to symbolize the biggest banking scandal in the country’s history, comes as India’s second-largest state lender seeks to tighten controls and restore its reputation.

The 123-year-old bank has lost more than half its market value since the fraud came to light in late January.

PNB will move all big client accounts out of the branch in downtown Mumbai that according to an internal investigation saw “exceptional growth” in the past few years largely because of its controversial dealings with firms owned by two related jewelers.

PNB has alleged that a handful of staff at the branch issued fake bank guarantees between 2011 and 2017 to help the firms of Indian diamond magnate Nirav Modi and his uncle Mehul Choksi raise billions of dollars in foreign credit. The duo have denied wrongdoing and are currently abroad.

Meanwhile, a PNB spokesperson said, “It has no plans to close operations in the Brady House branch. Reallocation of some of the accounts is part of the regular restructuring process at PNB to strengthen internal systems and processes and centralise certain critical functions.”

Retail operations for PNB customers continue to operate from the branch, the official said.