The bank has witnessed deterioration in gross net performing assets (NPAs) or bad loans, which rose to 18.38 per cent of gross advances at the end of March this year, as against 12.53 per cent year ago.
The bank has made provisions and contingencies worth Rs 20,353.10 crore for the fourth quarter while it was Rs 4,466.68 crore for the October-December quarter of 2017-18. Provisions for bad loans stood at Rs 16,203 crore compared to Rs 2,996 crore in the preceding quarter.
Provisions rose almost four-fold to Rs20,353 crore from Rs4,466 crore in the year ago period, on account of rising bad debt, the bank's stock exchange filing showed.
Group firms of Modi and Choksi secured loans from worldwide branches of other banks based on letters of undertaking (LoU) issued by employees of PNB. That led to a more than tripling of its total provisions from a year earlier to 203.53 billion rupees.
A LoU is a guarantee given by an issuing bank to Indian banks having branches overseas to grant short-term credit to the applicant. The fraud was allegedly perpetrated despite the circulars issued by RBI, which was in the knowledge of senior officials of PNB. She was executive director at PNB from July 2011 to November 2013. The investigations revealed that messages for fraudulent LoUs were sent to overseas banks by misusing an worldwide messaging system for banking called SWIFT platform and without making their subsequent entries in the PNB's internal banking software, thus bypassing scrutiny in the bank, they said. Gokulnath Shetty, the then Deputy Manager of the PNB, who allegedly issued the LoUs, has also been charge sheeted. She was set for superannuation on August 31 this year.
Jeweller Nirav Modi used fake letter of undertaking (LoUs) to defraud PNB of over Rs 13,000 crore in connivance with bank officials by exploiting the loophole of non-integration of SWIFT with the Core Banking Solution.
Instead, the RBI has asked the banks to classify stressed accounts as "special mention accounts", at three different levels depending on the extent to which payment of principal or interest on a loan has been delayed.
A similar fraud was detected in 2016, in which funds under the garb of LoUs were transferred in favour of a Hong-Kong-based company, purportedly issued by the Chandigarh branch of a nationalised bank to overseas branches of two other nationalised banks, including PNB.