International rating agency Moody's today said it has downgraded state-run Punjab National Bank's (PNB) rating to Ba1/NP from Baa3/P-3, due to impact on the lender's profitability following Nirav Modi-fraud case. The downgrade also reflects the weak internal controls and processes of the bank, given that the fraudulent transactions were undetected for a number of years. Following the announcement of the fraudulent transaction, Moody's initiated a review of the bank's ratings on February 20, 2018, which was completed now. "Nevertheless, these sources will unlikely prove sufficient to restore the bank's capitalisation to levels before the fraudulent transactions were discovered," the report said. Any indication that government support to the bank has diminished will also lead to a ratings downgrade, it added.

Source: dna May 21, 2018 08:42 UTC