case study of punjab national bank

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A detailed study on PNB scam

This article is written by Pratap Alexander Muthalaly , a student of The Government Law College Trivandrum. This article analyses the intricate details of the PNB scam, its overall impact and also the various financial tools and instruments manipulated in the scam.

Table of Contents

Introduction

On February 14th 2018, Punjab National Bank (PNB), disclosed that it had been defrauded out of roughly 1.8 billion dollars. This news shook the nation and all eyes turned to the culprit Nirav Modi, a rich diamond tycoon. This article details the true nature of the fraud, its repercussions and just how Nirav Modi and his associates pulled off one of the biggest bank scams in Indian history.

What is this fraud about

The PNB scam is basically a case of financial fraud that was committed by Nirav Modi and his associates who colluded with senior Punjab National Bank employees. To better understand the fraud and what it is all about we have to understand certain other basic concepts first.

SWIFT Transfers

Society for Worldwide Interbank Financial Telecommunications (SWIFT) is a cooperative society headquartered in Belgium. The primary role of SWIFT is to carry secure financial messages from one bank to the other. That is, if one bank wants to send a message to another bank, SWIFT carries the message in a safe and secure way, without altering the message. It is often misunderstood that SWIFT transfers money, this, however, is not the case. SWIFT is not involved in settling or clearing fund transfers, it only transfers secure messages.

In the case of PNB, the two employees directly used SWIFT to move millions of dollars across borders every hour— and bypassed the core banking system (CBS) which processes daily banking transactions and posts updates. 

Letter of Undertaking

Letter of undertaking, (LOU) is basically an instrument used by importers to carry out their business. For example, an Indian businessman has businesses in the US, he procures raw materials from a seller for a certain amount (ex- 100 cr) and may have to pay the amount in a short time which may not be possible at that time. Therefore, the Indian businessman approaches a bank in India and submits security worth roughly the same amount as the fee he is due to pay, and in return asks his bank to issue an LOU. The bank issues an LOU and sends a message to the supplier’s bank through SWIFT, guaranteeing money owed by the Indian businessman. This ensures the smooth conclusion of the business transaction.

In the case of PNB, the LOU’s were issued in favour of Nirav Modi bypassing the bank’s reporting system using SWIFT messages to overseas banks without authorization. Nirav Modi, with the assistance of senior PNB officials, was able to obtain LOUs without submitting any securities. These LOUs were then submitted via SWIFT messages to banks in other countries. 

How the perpetrators got caught

According to a 2018 article by the Hindustan Times, for the past seven years, two employees of PNB were sending unauthorised LOUs.  This was until one of them retired and a new employee joined in his place. In January, when Nirav Modi’s firm asked for a fresh set of guarantees, the new employee demanded collateral. The representatives from Firestar (Nirav Modi and co) responded by saying that they had never been asked for a guarantee in the past. This triggered an investigation which led to the curtains falling and the truth of the fraudulent LOUs coming to light. 

Legal angle

Fraud is essentially defined as any dishonest act or behaviour by which a certain individual gains or has the explicit intent to gain an advantage over another person. In a fraud, the loss caused to the victim is either directly or indirectly. While fraud is not described or discussed in a detailed manner in The Indian Penal Code, there are certain sections dealing with the constituents of fraud. This includes cheating, concealment, forgery counterfeiting and breach of trust.

In a contractual sense, fraud refers to and includes any acts by a party to a contract or with his expressed authority or instructions or by his agents with the intention to deceive another party or his agent or to induce them to enter into a contract. All of this is read in accordance with section 17 of the Contract Act.

In the modern age, banking fraud is on the rise and more prevalent than ever. Compared to  ordinary cases of thefts and robberies, the amount misappropriated in crimes like banking fraud runs into lakhs and crores of rupees. Bank fraud is by law a federal crime in most countries. Simply put, banking fraud is the use of potentially illegal means to obtain money, assets , or other property owned or held by a financial institution , or in some cases to obtain money from depositors by fraudulently posing as a bank or some other financial institution .

Fugitive Economic Offenders Act (2018)

In response to the huge bank scam, the government passed the Fugitive Economic Offenders Act (2018) which came into force on 21st April 2018. The Act was enacted to prevent economic offenders in the ilk of Nirav Modi from escaping the country. Courts are empowered under this Act to confiscate all assets and properties of the offenders who are charged with default over Rs. 100 crores and those who try to evade the charges by wilfully remaining outside the jurisdiction of the Indian judiciary. In accordance with this Act, the fugitive economic offender’s property and other valuable assets are confiscated. 

Impact and resulting aftermath

• PNB was essentially left holding bank guarantees worth in excess of  Rs 11,400 crore which it has to pay to a multitude of different parties including the State Bank of India, Allahabad Bank and Union Bank. The said payments were expected over the next few months. 
• Furthermore, the banking sector, jewellery sector and the insurance sector were stunted with serious negative repercussions after the findings of the case were reported to the public. 
• Big questions arose with regard to the credibility of public sector banks as a whole, and also the whether regulators like the  RBI and SEBI were performing their duties to the required standard.

In response to all this, the Reserve Bank of India immediately banned banks from issuing guarantees in the form of letters of undertaking (LOU) to prevent any further misuse of the medium. It was also decided that the process of issuing LoUs for trade-related credits for imports in India was to be discontinued by commercial banks with immediate effect. The RBI had also directed banks to connect their core banking systems (CBS) to the SWIFT (Society for worldwide interbank financial telecommunication) system by April 30, of that. Meanwhile, Nirav Modi was charged with criminal conspiracy, cheating, dishonesty, fraud, breach of trust and breach of contract and was arrested in London after the release of an arrest warrant against him.

Impact on the Stock Market

The overall value of PNB’s fraudulent transactions was said to be nearly 50 times that of the bank’s 2018 end third-quarter net profit of Rs 230.11 crores. In particular, there were five notable banks that had been directly impacted by the fraud as they had offered credit based on the LoUs that had been issued at the behest of PNB. The said institutions were UBO bank, Allahabad Bank, Axis Bank, Union Bank of India.

Union Bank of India : UBI is said to have suffered a reported loss of 5.8 per cent that led to Rs 633 crores of erosion in its overall market capital at the time (that is, between 12 February closing and 15 February closing). Overall the bank’s negative stock exposure as a result of the PNB fraud stood at a total of Rs 1920 crores. The bank was also reported to have suffered a net loss of Rs 1,249.85 crores in Q3FY18. It’s Gross NPAs stood at 13.03 per cent in Q3FY18 compared to 11.7 per cent in Q3FY17. 

Allahabad Bank : The bank saw a stock price drop of over 9.9 percent that continued till the 15th of February 2018. Moreover, Its market capitalization was said to have suffered an erosion of over Rs 484 crores. The bank’s overall exposure in PNB fraud was calculated as being roughly Rs 2400 crores. In Q3FY18, the bank reported a 5.4 per cent reduction in total income with a net loss of Rs 1263.79 crores. Its gross non-performing assets were also said to have skyrocketed to the value of 14.38 per cent in Q3FY18 in comparison with the reported to 12.51 per cent in Q3FY17. 

Axis Bank : The share price of Axis Bank fell by roughly 3.4 per cent, this downward spiral on up to to 15 February 2018, also, the overall market value was also said to have fallen reportedly by over Rs 4,800 crores. Finally,The bank’s overall exposure in PNB fraud is said to be around Rs 200 crore.

SBI : The State bank of India saw shares plummet by 3.34 per cent, with there being an overall market value drop of over Rs 8,329 crores between the time period of 12 February 2018 and 15 February 2018. Also, its reported exposure to the PNB fraud was calculated to be at 1360 crore. In Q3FY18, the state bank of India was hit with a net loss of Rs 2416 crores compared to the Rs 2610 crores profit in Q3FY17. Furthermore, its gross Non-performing Assets soared from 7.23 per cent in Q3FY17 to a reported high of 10.35 per cent in Q3FY18. 

Impact on LIC

While dealing a deadly blow to major Indian banks, it also had a strong impact on another state-owned entity,  the  Life Insurance Corporation. LIC, which lost a reported amount of Rs 1,400 crore. 

Impact on Jewellery Stocks

In lieu of the shocking developments, the shares of Gitanjali Gem fell by a reported 19 per cent soon after Punjab National Bank’s declared the news of the fraud to the wider public. Also, the stocks of other publicly listed jewellery traders suffered a hit with PC Jeweller witnessing a 19.50 per cent slump to Rs 303.00, Tribhovandas Bhimji Zaveri (TBZ) a recorded 4.32 per cent to Rs 110.60, and Thangamayil Jewellery fell by 2 per cent to 558.55 on BSE. Rajesh Exports was also hit by 1.34 percent to a recorded plummet of Rs 808.70 on the BSE. 

Reforms and lessons learnt

The scam pushed forward the catalyst for a slew of major reforms in the Punjab National bank. It has also seen a recent uprise in the bank’s performance across different indicators. The PNB had a score of 78.4 out of 100 and was ranked first in the EASE (Enhanced Access & Service Excellence)index, According to the report PNB displayed “strong performance” in areas like customer responsiveness, responsible banking, credit off-take and financial inclusion.

Stated below are some of the lessons learnt from the bank scam:

The first notable realization was that banks urgently needed to better manage their operational risks, essentially in the realm of credit, market and operation risks.

Credit risk (CR) and market risk (MR) are primarily related to potential losses from lending and investment activities respectively. Losses of this nature occur in a situation where there is a loan default or wrong valuation value of an investment.

Then we have Operational risk (OR) which works to indicate a failure in any of the banking systems, processes and also the people. OR covers a broad range of products and businesses, in contrast to CR or MR, which are focused on specific transactions.

Also, we must look beyond the banks. It has to be understood that various agencies also need to make changes to their existing behavioural patterns and attitudes in the field,  they must immediately sharpen and update their skills and knowledge of the banking business. Furthermore Internal, as well as statutory, auditors must be capable and also willing to highlight any inadequate processes or potential malpractices being followed by a banking institution. Even if certain specific transactions may manage to slip away undetected, the checking of the loan approval process and its issuance is a must which auditors have to take accountability for.

Thirdly, there is something for the Reserve Bank of India to learn as well. It is undeniable that The Reserve Bank of India (RBI) has been efficient in issuing all the requisite guidelines pertaining to CR, MR and OR. However, it also needs to promote better discipline in OR as so as to ensure better success in its supervisory duties. Moreover, The process of reporting Red Flagged Accounts (RFA) needs to be tested to see whether the correct balance between type-1and type-2 errors is being adopted by the banks in this process.

Finally, the Government of India, as a public policy leader and plan developer, should evaluate the chinks in its armour that have to lead to mishaps such as these. Furthermore it is necessary that the Ministry of Corporate affairs (MCA) take time to carefully review various factors like the disclosure standards of corporates, including banks. However, rather than merely making increases in the number of compliances, the MCA must also carry out a wider review of the disclosure and compliance process, to ensure that the process is as effective and error-free as possible.

The PNB scam has left a more than a noticeable dent on India’s banking sector. A positive outcome of this is that the government is more watchful and attuned to the banking sector and its various happenings. The scam also gives both the government and the reserve bank the opportunity to enact reforms. While the Fugitive Economic Offenders Act is certainly a good start, it must not be the only legislation enacted in this regard. It is crucial that we continue to push for reform in the banking sector, so as to prevent old and well-established banks like the PNB from having their reputations soiled in the coming future.

• https://acadpubl.eu/hub/2018-119-12/articles/6/1387.pdf
• https://amity.edu/UserFiles/admaa/6561aPaper%202.pdf
• https://www.business-standard.com/article/economy-policy/pnb-scam-impact-jewellery-exporters-fear-biz-will-shift-to-china-thailand-118112600082_1.html
• https://www.business-standard.com/article/finance/pnb-scam-to-impact-other-lenders-increase-their-bad-loans-provisions-now-118021500070_1.html
• https://www.youtube.com/watch?v=98qurQjGsg4

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THE PUNJAB NATIONAL BANK SCAM: CASE STUDY

Author: Ritika Dembla, a student at G.H. Raisoni Law University, Amravati

This article explores the Punjab National Bank (PNB) fraud case, popularly known as the Nirav Modi scam, highlighting its significance as one of India’s largest banking frauds. Through an analysis of the fraudulent scheme, the study sheds light on operational weaknesses within the banking sector and regulatory lapses that enabled the fraud to occur. By examining past scandals and the broader impact of financial misconduct, the paper emphasizes the urgent need for robust risk management practices and regulatory reforms to safeguard the integrity of the banking sector. Through a chronological overview of investigative efforts and legal proceedings, the research underscores systemic failures and governance deficiencies that perpetuated the fraud. In conclusion, the paper advocates for proactive measures to address vulnerabilities exposed by the PNB scam, emphasizing the importance of enhancing risk management, strengthening regulatory oversight, and fostering a culture of accountability within the banking industry.

INTRODUCTION

Punjab National Bank (PNB), a well-known public sector bank in India and a nationalized institution with global reach, received a lot of attention following the notorious Bandy House PNB Mumbai Branch scandal, also known as the Nirav Modi scam. This incident represents one of the largest banking frauds in Indian history and serves as a case study in research misconduct. On February 14th, 2018, PNB announced a huge loss of around 1.8 billion dollars, triggering significant scrutiny and focus on the main culprit, Nirav Modi, a prominent figure in the diamond industry. This academic article explores the details of the fraudulent scheme, its wide-ranging effects, and the tactics Nirav Modi and his allies used to plan this massive breach of banking integrity.

BRIEF OVERVIEW OF BANKING AND FINANCIAL SERVICES INDUSTRY (BFSI) SCANDALS IN INDIA

Cases involving renowned Indian businessmen such as Mr. Harshad Mehta, Mr. Ketan Parekh, Mr. Vijay Mallya, Mr. Mehul Chokshi, and Mr. Nirav Modi highlight the prevalence of severe financial irregularities in the banking sector. These individuals have been implicated in a number of high-profile frauds, involving the embezzlement of billions of rupees. These fraudulent activities employ a variety of methodologies, including the manipulation of financial instruments such as Ready Forward Deals and discounting pay-orders, as well as Ponzi schemes, money laundering, round-tripping under FEMA violations, and Letter of Understanding (LoU) and Letter of Credit (LoC) scams, among others. Researchers like Pradhan and Bai (2018) and Upadhyay (2019) have explained in scholarly discourse how the complex relationship between the world’s financial institutions and the growth of cross-border transactions has made banks more vulnerable to criminal activity. Additionally, the evolving regulatory landscape has contributed to a dynamic legislative framework aimed at addressing such malfeasance. The cumulative impact of these fraudulent actions on the Indian economy emphasizes the importance of thoroughly understanding banking frauds and financial scams. Furthermore, the gradual and persistent character of these scams raises serious questions about the effectiveness of banking system supervision procedures, with a focus on the role of whistleblowers in detecting, reporting, and mitigating misconduct.

PNB SCAM CASE STUDY

On February 14th, 2018, Punjab National Bank (PNB) was entangled in a major controversy of approximately 11,000 crore rupees involving the issuance of fraudulent bank guarantees to billionaire Mr. Nirav Modi. Mr. Modi worked in the diamond industry with his uncle, Mehul Choksi, and sought buyer’s credit from PNB to assist diamond imports. According to Reserve Bank of India (RBI) standards, buyer’s credit usually requires collateral securities. However, two PNB employees manipulated data to issue Letters of Undertaking (LOUs) without securing collateral, facilitating loans over six years from 2011 to 2017. These transactions involved Indian overseas banks, including Allahabad Bank and Axis Bank.

PNB’s SWIFT system, which facilitates transactions between Indian and foreign banks, was not directly integrated with the Core Banking System (CBS). As a result, manual processing took place at the Mumbai branch’s Brady House, allowing workers to issue fraudulent LOUs to foreign banks. This malpractice continued until January 2018, when PNB authorities detected anomalies in a loan application submitted by Nirav Modi’s enterprises, sparking a thorough inquiry. The case was then referred to the Central Bureau of Investigation (CBI), which resulted in legal proceedings against Nirav Modi, his family members, and their associated companies.

The case, which involved an intentional act of omission or commission in banking transactions, highlights the banking sector’s vulnerability to fraudulent activity. The lack of sufficient oversight and compliance with regulatory standards aided this misconduct, resulting in a significant financial loss for PNB. This case study underscores the need of a strong banking sector in ensuring the stability and integrity of the economy.

Nirav Modi initially approached PNB for finance for diamond imports, but was turned down due to the exorbitant interest rates. Instead, he obtained loans from foreign banks, leveraging PNB-issued LOUs without necessary procedures and record-keeping. PNB’s issuing of these LOUs over SWIFT channels circumvented its own processes, allowing for fraudulent transactions. The overseas banks relied on PNB’s guarantees, assuming PNB’s liabilities in the event of default, indicating a failure in risk assessment and oversight.

The timeline of events depicts the gradual reveal and escalation of the fraud, beginning with PNB making a formal complaint in January 2018, followed by following actions by investigative agencies and public disclosures from the bank. The situation raises serious concerns about PNB’s inadequate lending policies, management of banking operations, and the regulatory structure that governs such transactions.

INVESTIGATION

As of the latest developments up to March 2022, the Punjab National Bank (PNB) fraud involving Nirav Modi and his associates has undergone significant legal proceedings and investigative efforts. Initially, PNB detected irregularities when three associated firms – Diamond R US, M/s Solar Exports, and M/s Stellar Diamonds – approached the bank in January 2018 seeking Letters of Undertaking (LoUs) without the requisite cash margin. Upon further investigation, PNB uncovered fraudulent LoUs issued by two bank officials, Gokulnath Shetty and another unnamed individual, on behalf of the aforementioned firms associated with Nirav Modi and the Gitanjali Group. Subsequently, PNB filed a complaint with the Central Bureau of Investigation (CBI) on January 29, 2018, alleging collusion between Nirav Modi, his family members, and bank officials to perpetrate cheating against PNB, resulting in significant financial losses.

As of May 18, 2018, the scale of the scam had escalated to approximately ₹14,356.84 crore (US$2.1 billion), with Nirav Modi reportedly evading authorities and residing in London under alleged false pretenses. Efforts by the CBI to secure a red corner notice (RCN) against Nirav Modi, his brother Nishal, and other individuals associated with the scam have been ongoing, with international cooperation sought through organizations such as Interpol.

In subsequent legal proceedings, former MD and CEO of Allahabad Bank, Usha Ananthasubramanian, faced dismissal from her position and bail granted on a surety bond in August 2018. Additionally, investigations revealed a disproportionate accumulation of wealth by Gokulnath Shetty, prompting the registration of a case against him for amassing assets beyond his known sources of income.

Nirav Modi’s arrest in London in March 2019 marked a significant development in the case, with subsequent legal proceedings in the UK courts denying him bail multiple times due to flight risk concerns and evidence tampering threats. Furthermore, efforts by Indian authorities have led to the freezing of Swiss and Singaporean bank accounts associated with Nirav Modi and his family members, aiming to recover funds linked to the scam.

In August 2019, the CBI moved to declare Nirav Modi, his brother Neeshal Modi, and an associate proclaimed offender, seeking to attach their properties. Legal proceedings against Nirav Modi in the UK, including extradition hearings and asset seizures, have continued, with adjournments and asylum applications adding to the complexity of the case.

In parallel, the Enforcement Directorate (ED) has filed chargesheets and pursued legal action against Mehul Choksi, another key figure in the scam, alleging organized fraudulent activities across multiple jurisdictions. Additionally, efforts to confiscate assets worth nearly Rs 1,400 crore linked to Nirav Modi have been ordered by the Prevention of Money Laundering Act (PMLA) Court.

Overall, the PNB scam involving Nirav Modi and associated individuals has entailed extensive legal and investigative proceedings, with ongoing efforts to recover funds, prosecute perpetrators, and prevent further financial malpractice.

IMPACT ON BANKS

The impact of the Punjab National Bank (PNB) fraud scandal was felt by a number of banking institutions, including Union Bank of India, Allahabad Bank, Axis Bank, and State Bank of India. Union Bank of India’s stock value fell by -5.8% between February 12th and February 15th, 2018, resulting in a market capitalization loss of Rs 633 crores. Similarly, Allahabad Bank’s stock price fell by more than -9.9% during the same period, resulting in a market value fall of more than Rs 484 crore. Axis Bank’s share price fell -3.4% by February 15th, 2018, resulting in a market value reduction of more than Rs 4,800 crores. SBI, India’s largest public-sector bank, saw its share price fall by -3.34% between February 12th and February 15th, 2018, resulting in a market capitalization drop of Rs 8,329 crores. These adverse market movements reflect the broader impact of the PNB fraud scandal on the financial sector, with investor confidence shaken and significant value erosion witnessed across multiple banking entities.

IMPACT ON PNB RATING

Moody’s and Fitch, two renowned global rating agencies, have highlighted concerns about Punjab National Bank’s (PNB) creditworthiness. They have begun a rating watch on the bank, signifying a thorough examination prior to a possible downgrade or modification in outlook. Moody’s Investors Service has placed PNB’s local and foreign currency deposit ratings of Baa3/P-3, as well as its foreign currency issuer rating of Baa3, under scrutiny for possible downgrading. The primary reason for this examination is the anticipated financial consequences of the fraudulent acts. The key issue driving the rating action is the perceived possibility of a decline in the bank’s independent credit profile as a result of the identification of several fraudulent transactions.

CRISIL, an Indian rating agency, has assigned PNB a AAA grade, indicating the greatest level of safety for the instruments issued or the institution itself. On January 25, CRISIL changed PNB’s and other public sector banks’ outlook from negative to stable, citing government recapitalization support. Following suit, CARE granted PNB an AA+ rating, judging the current fraud incidence a significant event requiring rating changes in compliance with SEBI standards for rating agencies.

The Punjab National Bank (PNB) fraud has underscored significant credit risk exposure among several banks, prompting a critical examination of the underlying processes that allowed such misconduct to persist unchecked over an extended period. A notable operational deficiency was observed in the process of verifying transactions before disbursing non-funded loans, leading to a lapse in operational risk management and subsequent credit-related losses. As elucidated in the 5w2h analysis, adherence to standardized operating procedures with robust control mechanisms is imperative to mitigate such risks effectively.

Furthermore, a compliance failure was evident in the unmonitored utilization of the SWIFT financial messaging system, enabling collateral-free transactions with the bank’s accomplices and Nirav Modi without detection by other officials or during external audits spanning seven years. Enhancements in the bank’s risk management framework are warranted, given the recurrent susceptibility to fraudulent activities, indicative of inherent fragility and inadequate planning in internal risk management practices. Proactive engagement with relevant paying and intermediary banks could have averted monetary losses, highlighting the need for heightened vigilance among stakeholders who have yet to internalize the lessons gleaned from such incidents.

The regulatory oversight of banks is also subject to scrutiny, with questions raised regarding the efficacy of existing risk management protocols established by the Reserve Bank of India (RBI). While the RBI has introduced various risk mitigation measures, there is a call for empowering banks to swiftly address fraudulent activities, thereby circumventing bureaucratic impediments.

Beyond the substantial financial implications, the integrity of the banking sector’s reputation is imperiled, particularly amid global efforts to bolster banking reforms and enhance financial sector efficiency. The infusion of capital through recapitalization bonds aimed at revitalizing public sector banks burdened by non-performing assets (NPAs) and low capital adequacy ratios may necessitate a reassessment in light of these fraudulent activities.

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How the alleged Punjab National Bank fraud unfolded

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Explainer: how nirav modi cheated pnb of rs 14,000 crore through fraudulent lous.

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Punjab National Bank hit by Rs 11,400-crore fraud: Here’s what we know so far

A set of fraudulent transactions linked to billionaire jeweller nirav reported by pnb, have now swelled to nearly rs 11,400 crore. here’s an explainer on what the pnb fraud case is all about..

On 14 February, state-owned Punjab National Bank (PNB) disclosed that it has discovered $ 1.77-billion (around Rs 11,400 crore) worth of fraudulent transactions at one of its Mumbai branches. In a complaint to the Central Bureau of Investigation, the lender named firms and people associated with billionaire jeweller Nirav Modi to connived with some of its officials to defraud the bank using bank guarantees. For those who came late, here is a primer based on CBI’s first information reports and public information available so far:

What is the fraud about?

Two PNB employees sent unauthorised letters of undertakings (LoUs), essentially bank guarantees, to foreign branches of Indian lenders, on behalf of firms related to Nirav Modi and the Gitanjali Group. The LoUs basically told these other lenders: Lend money to Nirav Modi firms so that they can pay for their imports. If they don’t pay up, we will make good this payment.

What’s irregular about this?

In the normal course, when an importer goes to a bank to ask for such a guarantee, one of two things happens. One, the bank asks him for collateral before it gives a guarantee. This collateral could be property in his name, or a fixed deposit with the bank. Second, the bank sanctions a credit limit. That means it will evaluate the importer (just like a lender asks for your income proof and address proof before giving you a home loan) and says he is good to be given a loan for a certain amount; but no money actually changes hands.

Read | How Punjab National Bank fell victim to India’s biggest bank fraud

In the PNB fraud case, the bank employees had sent these guarantees in the absence of credit limits and collateral security (in Modi’s case). Secondly, they didn’t make an entry in the bank’s core banking system – the software used to support a bank’s most common transactions, which also acts as a record keeper. In some cases, they made a corresponding entry in the core banking system, but for lower amounts.

Why would an importer use this convoluted method to raise money?

There are multiple reasons. For one, he has raised money in foreign currency to pay for goods bought abroad. Second, the cost of such foreign currency borrowings abroad is typically lower.

What happens when the foreign bank or branch receives this guarantee?

When the foreign bank or branch receives the guarantee, for example from PNB, it will give a loan to the importer. That means it will deposit money either in the account of the supplier who’s selling goods to the importer, or in PNB’s account held with it. The tenure of this loan varies from ninety days up to even five years for capital goods. The money gets used to settle the payment for imports. Then, when the term of the loan is up and the importer makes money from reselling the goods he imported, he will pay this sum to PNB with interest. PNB in turn will settle with the.

What happened in this case?

According to the CBI FIR, in many transactions, the money raised through this guarantees was not used to make payments for imports. But it was used to settle earlier loans taken. In effect, every time a Nirav Modi related firm asked for a bank guarantee it was to settle an older loan taken through a previous bank guarantee. Thus, the amounts piled up to around Rs 11,400 crore.

How was this detected?

According to the FIR, two junior employees of PNB had been sending these unauthorised guarantees for seven years. Then one of them retired. In January, when representatives of Modi firms asked for a fresh guarantee, the new PNB employee in that position asked for collateral security. On being told that this was never asked for in the past, the bank started investigating and found hundreds of guarantees relating to these firms.

You mean no one thought to check this earlier?

PNB’s defense is that the SWIFT messaging system used to send these guarantees was not linked to its core banking system. SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. Experts also said that a concurrent audit — an audit of transactions done as they happen by internal or external auditors — should have caught this. Won’t someone look at the money deposited in PNB’s overseas accounts? Won’t someone reconcile SWIFT messages with the money that was transmitted through PNB’s systems? The jury is out on how many people at different executive levels are involved — either directly or because of negligence.

What happens now for PNB?

PNB is left holding bank guarantees worth Rs 11,400 crore which it has to pay to, among others, State Bank of India, Allahabad Bank and Union Bank. These payments are due over the next few months. The bank has tried to shift some of the blame to these banks. In a caution notice to the chiefs of other banks it essentially said this: You should have done more due diligence before giving out loans. Didn’t you notice that these guarantees are for one year, much above the RBI allowance of 90 days for the diamond industry?

Other banks aren’t buying these arguments. They say: We took an exposure on PNB, a state-owned bank (and an implicit bet on the Indian Union) not on a diamond merchant. It is still a gray area on who will actually pay up and how the burden will shared.

So, the banking system will take another Rs 11,400 crore on top of its huge bad loans problem of Rs 10 trillion?

Not necessarily. There will be some recoveries. For instance, the enforcement directorate has claimed it has already recovered gold, precious stones and diamonds worth around Rs 5,500 crore (although that valuation is debatable for an asset like diamonds). In any case, the entire Rs 11,400 crore which was raise for loans would either be in the form of diamonds (in case of genuine imports) or stashed away somewhere in other assets (if it had been diverted). It remains to be seen how much can be recovered.

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Timeline: Developments in the $2 billion Punjab National Bank fraud case

• Medium Text

Reporting by Krishna V Kurup in Bengaluru; Additional Reporting By Patturaja Murugaboopathy; Editing by Euan Rocha

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Nirav Modi case: How PNB was defrauded of Rs 11,400 crore

Union minister ravi shankar prasad said that the government had seized assets worth rs 1,300 crore belonging to nirav modi besides initiating revocation of his passport..

• Updated Mar 15, 2018, 10:37 AM IST

Diamonds are rare, so are the chances of a diamantaire defrauding a bank of more than Rs 11,300 crore. PNB's Brady House branch, less than a kilometer away from the swanky Nirav Modi diamond boutique in Kala Ghoda has become the epicenter of one of the largest banking fraud detected in the country.

Until a few days ago, Nirav Modi, the man at the centre of biggest scam at India's second largest public sector lender could be seen hobnobbing with Hollywood A-listers or cutting ribbons to open his upmarket diamond stores at some of the priciest locations across the world.

Modi, who grew up in Antwerp, the world's diamond capital, has his eponymous jewellery store on Madison Avenue in New York. The jewellery designer also boasts Bollywood star Priyanka Chopra as his brand ambassodor. According to Forbes, Wharton-dropout Nirav Modi has a net worth of $1.73 billion. He is said to have learned the tricks of the trade from his maternal uncle Mehul Choksi who is also the CMD popular jewellery brand Gitanjali Gems. 

In 2010, Modi became the first Indian jeweller to be featured on the cover of Sotheby's and Christie's auction catalogues. Modi's jewels also fetched a whopping Rs 60 crore at the Christie's auction way back in 2010. But Modi's ambitious plan to have 100 boutique retail stores worldwide by 2025 seems to have been cut short following the allegations of one of India's biggest banking fraud.

Union Minister Ravi Shankar Prasad said that the government had seized assets worth Rs 1,300 crore belonging to Nirav Modi besides initiating revocation of his passport. A lookout notice against the Surat-born diamond jewellery designer has already been issued by the CBI.

The fraud, incidentally, is 49 times the net profit posted by PNB for quarter ending December 31, 2017 and more than twice the amount that PNB got under bank recapitalisation plan.

PNB FRAUD Billionaire jeweller Nirav Modi allegedly acquired fraudulent letters of undertaking from one of its branches for overseas credit from other Indian lenders.

The Enforcement Directorate (ED) on Thursday conducted raids on jeweller Nirav Modi's properties in Mumbai, Surat and Delhi. A case of money laundering has also been lodged against Nirav Modi and others.

In a statement issued to exchanges, Punjab National Bank on Wednesday said it has detected some fraudulent and unauthorised transactions (messages) in one of its branch in Mumbai for the benefit of a few select account holders with their apparent connivance.

"Based on these transactions other banks appear to have advanced money to these customers abroad. In the Bank these transactions are contingent in nature and liability arising out of these on the Bank shall be decided based on the law and genuineness of underlying transactions," it said.

PNB has suspended 10 officers over the Rs 11,400 crore scam and referred the matter to CBI for investigation. According to media reports, Nirav Modi left the country on January 1 weeks before the CBI received complaint from PNB on January 29.

His brother Nishal, a Belgian citizen, also left the country on January 1, while wife Ami, a US citizen, and business partner Mehul Choksi, the Indian promoter of Gitanjali jewellery chain, departed on January 6.

The Punjab National Bank in a letter on February 12 warned the other banks by revealing the modus operandi used by bank officials of PNB's Brady House branch.

In the letter, PNB said, "It was found through SWIFT trail that one 'junior level' branch official unauthorisedly and fraudulently issued Letter of Undertakings (LoUs) on behalf of some companies belonging to Nirav Modi Group viz. Solar Exports, Stellar Diamonds and Diamond R US for availing buyers credit from overseas branches of Indian banks."

None of the transactions were routed through the CBS system, thus avoiding early detection of fraudulent activity, it added. The bank also cautioned of a similar modus operandi used by the same branch official in companies belonging to Gitanjali Gems Ltd, promoted by Mehul Choksi viz. Gitanjali Gems, Gili India and Nakshatra while issuing LOUs.

In case of LoUs, it has been found that at the time of issuing LoUs for a smaller amount by SWIFT, the transaction was routed throuth the CBS system but subsequently, amendments were made in these LoUs by substantially enhancing the amount of LoUs and transmitted through SWIFT without routing these enhancements through CBS.

LOUs were opened in favour of overseas branches of Indian banks for import of pearls for a period of one year, for which as per RBI guidelines, the total time period allowed is 90 days from the date of shipment. Union Bank of India, Allahabad Bank and Axis Bank are said to have offered credit based on letters of undertaking (LOUs) issued by PNB.

Among those named is a deputy manager, Gokulnath Shetty, who was posted at PNBs foreign exchange department in Mumbai since March 31, 2010. He had allegedly along with another official Manoj Kharat fraudulently issued LoUs to these firms without following prescribed procedure or making entries in the banking system, avoiding detection of transactions. 

When Nirav Modi companies asked for LoUs for raising buyers' credit after the retirement of the PNB employee involved in the scam, the Punjab National Bank sought 100 per cent cash margins for issuing LoUs. This was contested by the Nirav Modi firms, saying they had availed of the facility from as early as 2010.

NIRAV MODI SAGA

Nirav Modi, his wife Ami, brother Nishal and Mehul Choksi are partners in Diamonds R US, Solar Exports and Stellar Diamonds, which has shops in foreign locations such as Hong Kong, Dubai, and New York.

Modi, who had figured in the Forbes list of richest Indians, moved to India in 1990. The Nirav Modi store in New York shares space with legendary brands such as Chanel, Hermes, Prada and Gucci, and the designer is known to be shelling out a whopping $1.5 million a year as rental for the store. The store launch was graced by celebrity guests such as US presidential contender Donald Trump, Hollywood actress Naomi Watts and leading model Coca Rocha. Modi even walked the Red Carpet at the Oscars alongside Kate Winslet, who was adorned in a Nirav Modi jewel. Thereafter, he has opened stores on the Old Bond Street in London, Hong Kong and Macau.

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What is PNB Scam

Latest updates on pnb scam, uk court rejects nirav modi's bail plea due to 'substantial' flight risk.

The court heard that while Modi had lost his legal fight against being extradited, there were "confidential" proceedings ongoing which had been instigated by him

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The Punjab National Bank (PNB) on Wednesday moved an application before a special court here seeking restoration of the Rs 71 crore worth property owned by fugitive diamond merchant Nirav Modi

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Parab was a deputy general manager (finance) at Firestar Diamond, a firm owned by Modi, and was deported to India from Cairo in Egypt in April 2022

Nirav Modi loses bid to go to UK Supreme Court against extradition to India

Fugitive jeweller and designer had fled India in early 2018, days before the details of his alleged role in large-scale fraud at the Punjab National Bank became public

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Dominica drops illegal entry charges against PNB scam accused Mehul Choksi

All the proceedings against Choksi of illegal entry into Dominica were dropped on May 20, the spokesperson said.

Choksi moves Bombay HC seeking to keep in abeyance fugitive proceedings

Mehul Choksi has moved the Bombay High Court seeking that the proceedings initiated against him by ED, which has sought that he be declared a fugitive economic offender, be kept in abeyance.

Nirav Modi UK extradition appeal to be heard on December 14

Nirav Modi, the fugitive diamond merchant wanted in India to face charges of fraud and money laundering in the estimated USD 2-billion Punjab National Bank (PNB) scam case, has lodged his appeal against extradition from the UK and the case will be heard at the High Court in London on December 14.

Nirav Modi's brother-in-law appears before court for money laundering case

Fugitive diamantaire Nirav Modi's brother-in-law Maiank Mehta made his first appearance before the Special Prevention of Money Laundering Act Court in Mumbai on Tuesday in a money laundering case.

Properties worth Rs 500 crore of Nirav Modi firms restored to PNB

A special court here on Friday allowed 'restoration' of properties worth Rs 500 crore of fugitive jeweler Nirav Modi 's firms to Punjab National Bank

PNB scam: Mumbai court grants bail to Dhanesh Sheth, close aide of Choksi

A trial court here has granted bail to Dhanesh Vrajlal Sheth, the managing director of three firms accused in the multi-crore Punjab National Bank (PNB) fraud case

Dominica court grants interim bail to Mehul Choksi on medical grounds

The bail granted by the Dominica Court is strictly for medical treatment in Antigua

Dominica PM refutes claims of his govt involvement in Choksi's abduction

Dominica Prime Minister Roosevelt Skerrit has termed "total nonsense" the claims that his government was involved in alleged abduction of diamantaire Mehul Choksi

Fugitive diamantaire Mehul Choksi: The first glimmers of fraud

The diamantaire's implication in his nephew's defrauding of PNB is well documented. Less well known is the sharp practices he employed in his Indian businesses long before this global scandal erupted

Banks realised 40% loss in Mallya, PNB cases via sale of seized stock: ED

About 40% of the money lost by banks in the PNB scam and the fraud linked to Vijay Mallya's defunct Kingfisher Airlines has been realised by way of sale of shares seized under PMLA, the ED said

Not aware of any conclusive proof regarding Choksi's abduction: Antigua PM

Prime Minister of Antigua and Barbuda Gaston Browne on Tuesday said that he was not aware of any evidence that proves fugitive diamantaire Mehul Choksi was abducted and taken to Dominica

Choksi siphoned off Rs 6,345 crore PNB loan through Hong Kong firms: CBI

Choksi was running a "circular trade" with companies propped up by him as pearl suppliers in Hong Kong, through which he had managed to siphon off over Rs 6,345 crore borrowed from PNB, CBI alleged

PNB scam: CBI files supplementary chargesheet against Gitanjali ex-official

Two officials of the Punjab National Bank (PNB) -- Sagar Sawant and Sanjay Prasad -- and a director of the Gili and the Nakshtra brands under the group, Dhanesh Seth, have also been named as accused

Long wait for the next flight to Dominica

Efforts by India to get back Mr Choksi will depend to a large extent on the response to the request for his repatriation from Dominica

Choksi's lawyers say he misses court date in Dominica due to mental stress

Fugitive diamantaire Mehul Choksi failed to appear in Magistrate's Court in Roseau on June 14 for the commencement of the trial against him over his illegal entry into the Caribbean country

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A Timeline Of PNB Scam Involving Celebrity Jeweller Nirav Modi

Pnb fraud of rs 11, 400 crore is being investigated by two central agencies - the central bureau of investigation and the enforcement directorate..

Punjab National Bank Scam: Celebrity jeweller Nirav Modi fled the country on January 1.

Promoted Listen to the latest songs, only on JioSaavn.com

February 23, 2018: The Enforcement Directorate (ED) seizes over 10,000 imported watches from several locations connected to Nirav Modi. It also attaches 21 properties, including a penthouse and a farmhouse, of Nirav Modi and his group worth over Rs 523 crore.

February 24, 2018: The government has cancelled passports of celebrity diamond designer Nirav Modi and uncle Mehul Choksi.

February 27, 2018: A magistrate's court issues a bailable arrest warrant against diamond trader Nirav Modi.

February 28, 2018: Firestar Diamond Inc, the flagship company of Nirav Modi, files for bankruptcy in the United States.

The CBI or Central Bureau of Investigation had emailed Nirav Modi on his official ID asking him to join investigations. In his reply, the jeweller says that since he has businesses abroad, he will not be able to join the investigation.

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A Critical Analysis of the Punjab National Bank Scam and its Implications

International Journal of Pure and Applied Mathematics, Volume 119 No. 12, 2018, 14853-14866

14 Pages Posted: 19 Dec 2018

Dr. S. Gayathri

Vels Institute of Science, Technology & Advanced Studies; Vels Institute of Science, Technology & Advanced Studies

Mangaiyarkarasi T

SRMIST - Vadapalani - Department of Management

Date Written: August 20, 2018

At a time when the government is aiming for bank recapitalization, the PNB scam comes as a huge blow to the entire banking sector. The Rs 12,700 crore scam involves at least six banks, raising doubts over the internal safety of operations in financial firms. It may be noted that the PSBs lost at least Rs 227 billion to bank frauds in the last five years. The magnitude of PNB scam is very exorbitant and it has been happening for more than five years undetected. This poses serious questions into the internal operations and auditing processes. The apex bank of the country RBI is facing public wrath for not being able to detect the largest banking scam. It is high time that all PSBs should review their internal process and take appropriate actions. This paper aims to identify and analyze the factors that led to this massive scam. It uses the quality tool 5W2H for analysis. This paper also delves into auditing process of the banks and possible loop-holes that led to the fraud. This paper also summarizes the impact of scam on various banks and the economy as whole.

Keywords: PNB, Scam, Audit, RBI, 5W2H

JEL Classification: G28

Suggested Citation: Suggested Citation

S. Gayathri (Contact Author)

Vels institute of science, technology & advanced studies ( email ).

Velan Nagar Chennai, TN 600117 India

P.V, Vaithiyalingam Street Pallavaram Chennai, Tamil Nadu India

HOME PAGE: http://velsuniv.ac.in

SRMIST - Vadapalani - Department of Management ( email )

Chennai India

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Entire Marketing Strategy of Punjab National Bank with SWOT Analysis

By Aditya Shastri

Punjab National Bank is a state-owned commercial bank that was India’s first ‘Swadeshi’ bank. It began operations on April 12, 1895, in Lahore, with only 2 lakhs sanctioned capital and 20,000 working capital. Today, PNB is the country’s second-largest public sector bank.

In the Punjab National Bank case study, we shall cover the bank’s marketing strategy throughout its extensive journey with the help of its marketing mix, marketing campaigns, SWOT analysis, and social media presence. Let’s get started by learning more about the company.

About Punjab National Bank

The Punjab National Bank (PNB) was established in the spirit of nationalism, and it was the first bank entirely run by Indians and funded entirely by Indian capital. PNB has since merged with 9 other banks throughout the course of its existence.

Personal and corporate banking, commercial, agricultural, and export finance, as well as international banking, are all available services offered by the financial institution. Its lending services include mortgages, car loans, and college loans. Indian conglomerates, small and mid-sized firms, non-resident Indians, and multinational corporations are among PNB’s diverse clientele.

The bank has various subsidiaries such as PNB Gilts Ltd, PNB Investment Services Ltd, PNB Insurance Broking Pvt. Ltd, PNB Cards and Services Ltd, Druk PNB Bank Ltd, and Punjab National Bank (International) Ltd, among various other associates and joint ventures.

Now that we understand the bank’s business and offerings, let’s analyse its marketing starting with its marketing mix.

Marketing Mix of Punjab National Bank

Product, Price, Place, and Promotion are the four major components of a marketing mix. A company’s combination of activities or tactics of marketing its service or product in the marketplace is referred to as the marketing mix. In the case of service offerings instead of products, the marketing mix involves three more Ps- People, Process, and Physical Evidence. Let us talk about the marketing mix of PNB.

Punjab National Bank has a wide geographical presence in India, with branches in personal, rural, and corporate banking. Customers can choose from a variety of products offered by Punjab National Bank, such as:

• Personal services- Deposits, retail and MSME loans, insurance, credit and debit cards, current accounts, agricultural banking, etc. 
• Corporate Services- Corporate loans, EXIM finance, exporters gold card scheme, money management services, door-step banking options, etc.
• International services- NRI services, forex services, international cards, offshore banking options, etc.
• Financial Services- Depository services, non-life insurance, mutual funds, retirement schemes, merchant banking, etc.
• E-services like BHIM, PNB Kitty, PNB Yuva, Unified Payments Interface, Retail Internet Banking, Corporate Internet Banking, Mobile Banking, are also offered by the bank.

Despite being a state-owned corporation, Punjab National Bank faces stiff competition from the likes of State Bank of India, Corporation Bank, Bank of Maharashtra, State Bank of Mysore, and others. Since the government owns a large portion of the bank, the interest rates set by PNB are lower than those set by private banks, which exist solely to make a profit.

While seeking profit, public banks must ensure that they are the bank of the people, fostering the country’s development. The RBI guidelines, competitor offerings, and business interest rates all influence PNB’s pricing decisions.

Place and Distribution 

Punjab National Bank is a state-owned bank that is present Pan-India. Its headquarters are located in New Delhi. The bank has a large customer base of 188 million customers. It has over 10910 branches and 13000 ATMs spread across 764 cities. Given the bank’s extensive presence across the country, the figures show that accessing a Punjab National Bank branch is very convenient. Outside of India, Punjab National Bank has offices in Hong Kong, Dubai, Kabul, Kowloon, Shanghai, Sydney, and Oslo.

Punjab National Bank participates in a variety of corporate social responsibility programmes, including health screenings, tree-plantation campaigns, recycling drives, the installation of dustbins, the sponsorship of uniforms, and the adoption of villages, among others. This helps in promoting a positive and trusting image to the customers. Punjab National Bank had also partnered with cricketer Virat Kholi as a brand ambassador to garner the interest of young people. We talk about this later on in the blog, under PNB’s marketing campaigns. The bank also promotes itself through audio/video advertisements, print media, social media, underprivileged, and its own website.

Punjab National Bank is a massive corporation with over 70,000 employees. PNB employs 919 people with disabilities, according to public records. This is a great way to support the underprivileged and contribute towards society. PNB Parivar is the company’s human resource management software, which refers to the workers as a family. It was established in 2006 with the aim of making payroll processing, wage payments, and employee loan monitoring more transparent. It also acts as a dashboard for all internal news, as well as questions about transfers and postings. This made the company an aspirational organisation for employees to seek employment under.

Punjab National Bank has expanded steadily in both organic and inorganic ways during its extensive journey in the industry. PNB was formed by the merger of nine separate banks, bringing it to its current scale. Some of these banks were: 

• Bharat Bank Ltd
• Universal Bank of India 
• Indo-Commercial Bank 
• New Bank of India 
• Nedungadi Bank 

Physical Evidence

Since it is a public sector bank, Punjab National Bank’s infrastructure is less technology-centric. It also invests comparatively lesser in customer service. Bottlenecks and bureaucracy are public-sector businesses’ commonly experienced problems, making it difficult to have above-average customer service. However, in terms of speedy transactions, a wide range of services, and extensive facilities, Punjab National Bank’s services are comparable to those of a private bank.

The marketing mix of Punjab National Bank is thus complete, with each strategy and its objectives detailed. Each of these help in envisioning the overall business and marketing strategies of a company. Let’s see how these align with PNB’s marketing strategy.

Marketing Strategy of Punjab National Bank

In this section of the blog, we shall talk about Punjab National Bank’s marketing strategy in terms of its STP i.e. segmentation, targeting, and positioning. Punjab National Bank segregates and targets existing high-value customers. PNB does not geographically segment an exclusive market segment since it has a wide presence in both rural and urban areas.

Their target audience includes people who are self-employed, corporate, or government workers in rural, urban, and metropolitan areas. It also targets teachers, people from low-income families, and others who are financially disadvantaged to avail their services. The bank mainly markets aggressively through print and television media, and via call centers and outbound sales forces to procure new customers or at least increase brand awareness.

Over the years, PNB has mainly positioned itself based on its value proposition. Today, it emphasises upon its telebanking, net banking, internet banking, and other value-added services with the aim to communicate its image as a value-providing bank. This is how PNB segments and targets its audience, positioning itself appropriately.

One of the most effective ways to position a brand and to communicate to a target audience, is by way of marketing campaigns. In the next section of the blog, we shall look at some of PNB’s campaigns.

PNB’s Marketing Campaigns 

Throughout its decades-long presence in the industry, Punjab National Bank has carried out many advertising and marketing campaigns. Following are two of the bank’s most popular campaigns:

“Digital Apnayen”

On the occasion of Independence Day, 15 August 2020, the bank’s Managing Director S S Mallikarjuna Rao launched the campaign. The campaign aimed to enable and encourage customers to use digital platforms and donate to the PM CARES Fund for COVID-19 relief through PNB. This Campaign was thus named “Digital Apnayen”. Under this campaign, the bank pledged to donate Rs 5 to the PM CARES Fund on behalf of each customer who made their first financial transaction to unlock their RuPay Debit card, either at a point of sale (PoS) or via an e-commerce site. It was an overall effort to get customers to avail their services while also contributing to a believed noble cause.

#JoinTeamKohli

PNB’s then brand ambassador Virat Kohli featured in a host of advertisements. Ranging from festive ones, to informative ones, #JoinTeamKohli being the recurring hashtag used to encourage customers to join Virat in availing the bank’s services. The cricketer genuinely marketed the brand and was quoted saying that he was an account holder since he was 16. Each advertisement under these campaigns ended with an assuring “Mera Apna Bank” note from Kohli.

Advertising and marketing campaigns are also widely conducted via social media and digital platforms in today’s times. We shall thus analyse PNB’s social media marketing presence now and see how it manages to build its digital brand position.

Digital Marketing Presence

Social Media today plays an important role for a company to make its brand accessible. As the use of social media increases by the day, it is becoming an important tool to reach out to potential customers and increase brand recognition. We  Following is PNB’s digital presence summary:

• Punjab National Bank has 61.4K followers on Instagram, 212Kfollowers on Twitter, and 1.2M likes on Facebook.
• PNB posts daily and most of their posts are about their offerings and policies.
• Their content is both in English and Hindi for providing easy access to their audience.
• They run various contests to engage and interact with their followers. For example, they recently hosted a digital literacy contest in the form of a crossword puzzle activity. 

• The bank also posts content in public interest and awareness. For example, they started a campaign called #FactCheckWithPNB, wherein they debunked common banking misconceptions.

• The bank practices festive marketing by promoting relevant services on account of festivals, while wishing customers.

• Socially conscious initiatives are also undertaken by the bank, by celebrating Earth Day, Women’s Day, World Health Day, etc

PNB is certainly trying its best to be engaged with its digital audience and post relevant content accordingly. 

Finally, using all of the information we collected, we conducted PNB’s SWOT analysis to summarise its position and operations.

SWOT Analysis of Punjab National Bank

The SWOT analysis of a business spells out its strengths, weaknesses, opportunities, and threats, all of which can lead to the company’s downturn or growth. It is a form of strategic planning that helps an organisation determine its current position. The SWOT analysis of Punjab National Bank can be seen in the table below:

Strengths of PNB

• Large client base of 188 million customers.
• PNB has a large network of branches and ATMs, with 10910 branches and over 13000 ATMs.
• Some of the famous banks, such as United Bank of India and OBC (Oriental Bank of Commerce) have merged with PNB
• Significant international presence
• Strong I.T. operations

Weaknesses Of PNB

• Less penetration and presence in the rural areas.
• Inadequate advertising and branding as compared to other private sector banks.
• Negative news coverage for Involvement in malpractice leading to an unfavourable brand image in the minds of the customers’.

Opportunities for PNB

• PNB could launch its own E-Wallets, which are currently popular in the country. 
• E-Gateway can be offered to website owners for a small fee. 
• To attract more clients, the bank could place a greater focus on business loans. 
• To increase its cash deposit ratio, the bank could introduce new savings account schemes.

Threats to PNB

• The main challenge is economic fluctuations and crises.
• The Bank is also threatened by RBI and government regulations.
• Competitors, both new and old

The Punjab National Bank has managed to be in business for many years. Its core services and offerings are up to industry standards. As we discussed in the marketing mix, they are very accessible to the general public and also use standard promotional techniques to increase their client base.

Their marketing efforts over the years had proven successful, along with their social media presence as well. But due to their brand’s coverage in recent controversies, the common man’s perception remains hesitant and unfavourable. They need to actively work on revamping their brand perception and image to be able to gain consumers’ trust and business.

That brings us to the end of this case study. We hope you enjoyed reading this blog and found our information useful. If you did, share it with your peers and friends and like the blog. Thank you!

Author's Note: My name is Aditya Shastri and I have written this case study with the help of my students from IIDE's online digital marketing courses in India . Practical assignments, case studies & simulations helped the students from this course present this analysis. Building on this practical approach, we are now introducing a new dimension for our online digital marketing course learners - the Campus Immersion Experience. If you found this case study helpful, please feel free to leave a comment below.

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Aditya Shastri

Lead Trainer & Head of Learning & Development at IIDE

Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs...... [Read full bio]

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