PNB Share Drops 3% Amid Rs 2,434-Cr Loan Fraud by Ex-Promoters of Srei Group
On December 29, 2025, PNB shares fell about 3% after the bank reported a Rs 2,434‑crore loan fraud involving former Srei Group promoters. Despite full provisions, the news shook the market and raised concerns about credit risk and governance.
Background of the Srei Group and Loan Details
- Srei Group Overview: Major non‑banking financial player in India, focused on construction equipment, infrastructure projects, and leasing.
- Key Companies: SREI Equipment Finance Ltd (SEFL) and SREI Infrastructure Finance Ltd (SIFL) took large loans from banks, including PNB.
- Total Debt: Part of a bigger debt of around Rs 32,700 crore, resolved under the Insolvency and Bankruptcy Code (IBC).
- NARCL Takeover: In December 2023, the National Asset Reconstruction Company Ltd (NARCL) took over SEFL and SIFL following insolvency proceedings.
- Fraud Amount: PNB reported Rs 1,240.94 crore in SEFL and Rs 1,193.06 crore in SIFL as part of the Rs 2,434 crore total fraud.
The Fraud Case
- PNB Reports Fraud: The bank reported the loan fraud to the RBI after internal reviews.
- Who’s Involved: Alleged against former promoters of SEFL and SIFL, who borrowed funds but failed to repay as agreed.
- Why It’s Classified as Fraud: Even though the companies were resolved under IBC, PNB’s detection and reporting triggered the fraud designation.
- Regulatory Compliance: Disclosures were made under SEBI regulations and PNB’s material events policy.
- Possible Legal Action: Agencies like CBI and Enforcement Directorate (ED) may investigate further if misuse of funds is confirmed, though formal cases are still emerging.
Market Reaction and PNB Share Performance
- Immediate Impact: After PNB reported the fraud, PNB’s share fell about 3% intraday, touching around ₹116.60 on the NSE.
- Year-to-Date Performance: Before this news, PNB shares had risen roughly 16–17% in 2025, showing strong prior growth.
- Volatility: The stock had seen ups and downs over the last six months, reflecting market sensitivity.
- Investor Sentiment: Traders turned cautious as banks with high NPAs often face pressure on valuations.
- Technical View: Indicators like RSI showed the stock was in a neutral zone, not oversold, but under stress.
Impact on PNB and the Broader Banking Sector
- Credit Quality Reminder: The fraud highlights ongoing credit challenges in India’s banking sector.
- Provisions Made: PNB has set aside 100% of the exposure, covering potential losses, but the reputation impact remains.
- Investor Confidence: Frequent large frauds can weaken confidence and attract regulatory scrutiny.
- Focus Areas for PNB: Improving asset quality and maintaining investor trust are now top priorities.
- NPA Trend: Gross NPAs at PNB were decreasing, showing some cleanup progress before this event.
- Sector-Wide Pressure: Banks are under pressure to tighten due diligence and strengthen governance, especially for big loans.
- Regulatory Oversight: RBI has taken steps like superseding boards and initiating insolvency processes in troubled cases.
Legal Proceedings and Accountability
- Fraud Reporting: PNB has reported the fraud to the RBI and filed disclosures with stock exchanges.
- Legal Process: Full investigations by law enforcement may take months to unfold.
- Accountability: Former promoters could face action under financial crime laws if funds were misused.
- Asset Recovery: Efforts to recover misused funds will be closely monitored, though the process can be slow.
- Investor Watch: Investors and analysts are paying attention to how authorities handle formal cases.
Conclusion
To sum up, pnb share has faced a sharp near‑term setback on news of a Rs 2,434 crore loan fraud tied to former Srei Group promoters. While the bank has fully provisioned for these losses, markets reacted to the seriousness of the disclosure and what it signals about risk management. For long‑term investors, this event underscores the importance of corporate governance and credit quality in banking stocks. In the immediate future, PNB’s focus will be on clarifying regulatory questions and restoring confidence among stakeholders.
FAQS
PNB share dropped about 3% after the bank reported a Rs 2,434‑crore loan fraud linked to former Srei Group promoters.
The total fraud reported by PNB amounts to Rs 2,434 crore, split between SEFL (Rs 1,240.94 cr) and SIFL (Rs 1,193.06 cr).
Yes, PNB has made 100% provisions for the exposure, meaning the potential loss is already accounted for in its books.
PNB reported the case to the RBI, and agencies like CBI and ED may investigate. Asset recovery and accountability proceedings are expected to take time.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
