New Delhi: Following the multi-crore fraud that took place in the bank, Fitch Ratings on Tuesday has downgraded the Viability Rating of Punjab National Bank (PNB) to `bb-` from `bb` and has maintained the rating on Rating Watch Negative (RWN).
According to a statement from the credit ratings agency, PNB`s other ratings are unaffected by this downgrade.
"The downgrade follows our assessment of how losses resulting from fraudulent transactions reported in February 2018 will affect the bank`s financials, including its earnings and core capitalisation. The downgrade also reflects the bank`s risk controls, which we think are weaker than what we had previously believed, since the fraud was undetected for several years and acquired a large scale of $2.2 billion. That said, the bank plans to strengthen its risk control"," the statement said.
Soon after the fraud was revealed in February 2018, the Fitch had warned PNB of downgrading its Viability Ratings.
A fraud of around $2.2 billion took place in PNB, the second largest in public sector, by diamond trader Nirav Modi and his uncle Mehul Choksi.