Markets regulator Sebi will consider penal action against Punjab National Bank and Gitanjali Gems after completion of its probe into suspected trading and disclosure related issues in the matter of over Rs 14,000 crore banking fraud, senior officials said.
The markets watchdog last week issued a warning letter to PNB for delaying disclosures to stock exchanges about the fraudulent transactions allegedly carried out by absconding Nirav Modi and Gitanjali Group of companies.
However, the probe is continuing and the penal action would depend on the final outcome of the investigation, the officials added.
PNB was defrauded allegedly by the diamond trader and his associates by fraudulent use of Letters of Undertaking (LoUs) and Foreign Letters of Credit (LoC) in connivance with certain bank officials.
The Securities and Exchange Board of India (Sebi) and stock exchanges have been analysing the stock market trade details of all entities associated with Modi and Gitanjali Gems' main promoter Mehul Choksi, who has already been under scanner for various cases including a brokerage default incident, senior officials said.
Incidentally, in July 2013, NSE in consultation with Sebi had debarred Gitanjali Gems and Choksi, among others from trading, for securities market violations relating to trading in his company.
Further, they are also being investigated by the Enforcement Directorate (ED) and Central Bureau of Investigation (CBI).
As per Sebi's warning letter, there were delays of 1-6 days by PNB in making disclosures to the stock exchanges pertaining to the filing of complaints with the Reserve Bank of India (RBI) and CBI. This delay in informing the stock exchanges is a violation of the listing regulations.
Under these norms, companies need to inform stock exchanges about any price sensitive information in a timely manner.
The Sebi's communication refers to various disclosures made by PNB to stock exchanges during February and March this year regarding certain fraudulent transactions with respect to Modi group, Gitanjali group and others and referring of the same to law enforcement agencies.
In a disclosure to bourses last week, PNB announced that the amount involved in the alleged fraud is now pegged at Rs 14,357 crore. The bank during February and March announced that it had come across fraudulent transactions worth Rs 11,400 crore.
The state-run lender has posted its highest ever quarterly loss of Rs 13,416.9 crore in three months ended March 31, 2018, as compared to a net profit of Rs 261.9 crore in the year-ago period.