PNB shares slide over 3% as bank flags ₹2,434 crore fraud linked to SREI firms

Shares of Punjab National Bank (PNB) fell over 3% in early trade on Monday after the public sector lender disclosed a borrowing fraud exceeding ₹2,400 crore linked to the former promoters of two SREI group companies.

Weighed down by the development, shares of Punjab National Bank fell as much as 3.4% to ₹116.25 in opening trade on the BSE. The PSU bank stock, however, pared most of its losses and was trading 0.4% lower at ₹119.85 at the time of reporting, giving the lender a market capitalisation of about ₹1.37 lakh crore.

Over the past year, PNB’s share price has climbed 17.5%, with an 8% gain in the last six months, although it has declined 4.5% over the past month. The stock hit a 52-week high of ₹127.80 on December 2, 2025, and a 52-week low of ₹85.50 on March 4, 2025.

Reports ₹2,400 cr loan fraud linked to SREI ex-promoters

In a post-market filing on December 26, the state-owned bank said it has identified a fraud of ₹1,240.94 crore in SREI Equipment Finance Ltd (SEFL) and ₹1,193.06 crore in SREI Infrastructure Finance Ltd (SIFL). PNB clarified that it has already made full provisioning for the entire outstanding exposure in both accounts.

“Pursuant to the applicable provisions of SEBI (LODFR) Regulations, 2015 and the Bank’s Policy for determining materiality of events/information required to be reported to the Stock Exchanges, it is hereby informed that the bank has reported borrowal fraud to RBI against the erstwhile promoters of the below mentioned entities: SREI Equipment Finance (₹1,240.94) and SREI Infrastructure Finance (₹1,1 93.06 crore),” the release noted.

The bank also noted that both entities have been successfully resolved under the corporate insolvency resolution process (CIRP) through orders of the National Company Law Tribunal (NCLT).

The disclosure relates to the SREI Group, whose infrastructure finance arm began operations in 1989 as a construction equipment financier before expanding into wider infrastructure lending. Over time, SREI Infrastructure Finance Ltd transitioned into an NBFC-Investment and Credit Company (NBFC-ICC) and was notified as a public financial institution by the Ministry of Corporate Affairs in 2011, building a multi-decade presence in asset finance.

For the second quarter ended September 30, 2025, Punjab National Bank reported a 14% year-on-year rise in net profit to ₹4,904 crore, while operating profit increased 5.5% YoY to ₹7,227 crore. Total income for the July–September quarter stood at ₹36,214 crore, up 5.1% YoY.

For the first half of FY26, the bank’s total income rose 10.3% to ₹73,445 crore, while operating profit grew 6.5% to ₹14,308 crore. Net interest income (NII) for H1 FY26 came in at ₹21,047 crore, registering a marginal 0.26% year-on-year increase. Interest income climbed 6.7% YoY to ₹31,872 crore, while interest expenses rose 10.6% to ₹21,403 crore, reflecting higher funding costs.

On the asset quality front, gross non-performing assets declined by ₹7,239 crore to ₹40,343 crore, while net NPAs fell by ₹648 crore year-on-year to ₹4,026 crore. The capital adequacy ratio improved to 17.19%, with Tier-I capital at 14.41%—including common equity tier-1 of 12.75% and additional tier-I of 1.66%—and Tier-II capital at 2.78%.

As of September 30, 2025, PNB operated 10,228 domestic branches and two overseas branches, with 63.3% of its network located in rural and semi-urban areas. The bank’s distribution footprint includes 11,187 ATMs and 32,278 business correspondents, taking its total touchpoints to 53,693.

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