Following Rs 11,000 crore scam, Fitch places PNB on ‘Rating Watch Negative’

Following the fraud worth over Rs 11,000 crore in Punjab National Bank, the global ratings agency Fitch has placed the state-run bank’s viable rating on “Rating Watch Negative (RWN)”.

Fitch said, “the rating will be resolved once more once more clarity emerges on the extent of control failures and the impact on PNB's financial position.”

The RWN rating could further result in a downgrade of the PNB's Viability Rating.

"While the exact financial impact from this event is still being ascertained, it has raised questions on both internal and external risk controls as well as the quality of management supervision considering that the fraud went undetected for several years," the rating agency added.

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Diamond czar Nirav Modi, his uncle Mehul Choksi allegedly defrauded the Punjab National Bank by making fraudulent transactions of over Rs 11,300 crore through 151 letters of understanding.

Apart from Fitch, another rating agency Crisil had already put the scam-ridden bank's rating on "rating watch with developing implications".

The agency had also sought more clarity from PNB bank on several issues including the timeline and the quantum of crystallization of this contingent liability, prospects for recovery.

"We've placed our ratings on the debt instruments of PNB on 'rating watch with developing implications', following its February 14 disclosure that it has detected some fraudulent and unauthorised transactions at its Brady House branch," the agency said.