PNB Reportedly to Close Most Brady House Branch Operations

India’s Punjab National Bank (PNB) is reportedly planning to shut down almost all of operations at its Mumbai branch, as the country’s second-biggest state lender seeks to recover from a $2 billion fraud scandal that has marred its business and reputation.

Aiming to restore its reputation and have stronger control of the business, four people with knowledge of the matter said the Brady House branch, which has a foreign exchange department and largely sees to mid-sized corporate accounts, will have its small retail operation stay open after the reorganization.  

PNB was also relocating some employees and huge accounts, with each involving yearly transactions of over ₹500 million ($7.28 million), to large corporate branches for better monitoring.

A spokesman for PNB stated that reallocation of some of the accounts is part of the standard restructuring process at the bank to strengthen internal systems and processes, and centralize certain critical functions.    

More than two-dozen employees were notified this week regarding the decision to downsize the Mumbai branch, according to three of the sources, adding that the branch might eventually close.

The spokesman, however, stated that the company does not intend to close operations there.      

The Indian lender is believed to have already begun transferring accounts to neighboring branches and that only a small retail banking operation is expected to stay at the Brady House branch for the time being.

One of the sources stated that PNB will also consider performing similar actions for some other branches to lessen risks.

PNB chief executive Sunil Mehta has not yet commented on the matter, but said on Friday the bank was set to bounce back within six months.

PNB Business Hit by $2 Billion Fraud Scandal

The move to scale back its operations at the Brady House branch that was at the center of a $2 billion fraud case, came as PNB seeks to tighten control and mend its damaged reputation.

Since the discovery of the fraud in January, the New Delhi-based firm has lost more than half its market value. Its business at the branch’s foreign exchange operations has also significantly declined due to the scandal.  

PNB has claimed that some of the employees at the branch issued fraudulent bank guarantees between 2011 and 2017 to help companies of Indian diamond merchant Nirav Modi and his uncle Mehul Choksi raise billions of dollars in foreign credit.

Modi and Choksi have denied wrongdoing and are currently abroad.                 

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