PUNJAB NATIONAL BANK: FRAUD AND MEGA AMALGAMATION
CASE STUDY SOLUTION
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SYNOPSIS
In February 2022, Atul Kumar Goel assumed the role of managing director and chief executive officer
(CEO) at Punjab National Bank (PNB), a critical position in the wake of the bank’s challenges, including
a massive instance of fraud, of ₹143.56 billion1 in 2018, and challenges associated with the amalgamation
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of the United Bank of India (UBI) and Oriental Bank of Commerce (OBC) in 2020. With over three decades
tio
of experience leading other public sector banks, Goel embarked on the mission to restore PNB’s 128-year
legacy. Faced with the daunting task of restoring the bank’s former reputation and glory, Goel explored
strategies for implementing a comprehensive plan to bring PNB back on the track of sustainable growth.
lu
Which strategy would reshape the bank’s trajectory and ensure sustainable growth while also reviving
PNB’s legacy and heritage?
So
OBJECTIVES
• Assess the aftermath of a significant banking fraud and explore recovery strategies.
• Investigate the challenges in merging two or more national organizations.
• Explore the role of top management in retaining customer trust during a disaster.
• Gain insight into evolving customer needs in the digital economy era.
The Case Solution Starts From page 6
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ASSIGNMENT QUESTIONS
1. How did PNB suffer as a victim of India’s biggest banking fraud? What did PNB do to regain its lost
image among stakeholders?
2. What are the strategies for a successful amalgamation? Do you think the amalgamation with OBC and
UBI was successful?
3. What critical issues did PNB confront following the amalgamation with OBC and UBI?
The Case Solution Starts From page 6
,4. Do you agree with the decision of Mallikarjuna Rao, PNB’s previous managing director and CEO, to
undertake organizational restructuring prior to IT integration?
5. What were the various options in front of Goel to revive PNB, and what did he choose to do? Do you
agree with Goel’s turnaround initiative to bring PNB on track?
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Sa
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ANALYSIS
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So
1. How did PNB suffer as a victim of India’s biggest banking fraud? What did PNB do to regain its
lost image among stakeholders?
Detection of fraud and the resulting regulatory punishment impacts the interaction among banks and
companies by impacting credit and operational risks. These occurrences in companies cause banks to be
concerned about a company’s future cash flows and profitability, influencing their credit behaviour toward
the company and reducing loans to similar companies.
Specifically, a rise in incidents of fraud might alter the company’s legal liability and lead to reputation loss.
To preserve its interests, the bank might not provide the business with favourable loan conditions and may
devalue available data on the firm’s performance. Second, most corporate fraud disclosures are tied to
unlawful activities. Unlike regulators, banks have to take legal action when corporate malfeasance is
discovered. This might result in increased punishment of the company from the authorities, public
The Case Solution Starts From page 6
,5. What were the various options in front of Goel to revive PNB, and what did he choose to do?
Do you agree with Goel’s turnaround initiative to bring PNB on track?
e
pl
m
Before taking over the charge of the bank, Goel had closely observed PNB’s fight to regain its position,
which started with overcoming the ₹143.56 billion fraud scandal in 2018. Despite the fraud and money
Sa
laundering lawsuit involving disgraced diamond trader Nirav Modi, the bank was willing to reap the
benefits of amalgamation after massively integrating businesses, people, and technology.25
After acquiring two nationwide banks, navigating the banking system became an intricate balancing act for
PNB. Although PNB had grown into a total business, it had to hunt for alternative revenue via different
n
cross-selling, such as insurance and other non-core activities. Asset quality was an issue for all banks, and
tio
lu
So
The Case Solution Starts From page 6
, EXHIBIT -3: PUNJAB NATIONAL BANK POST-AMALGAMATION FINANCIALS
AND KEY RATIOS (IN ₹ BILLIONS)
Parameters Mar 2023 Mar 2022 Mar 2021 Mar 2020
TOTAL NET WORTH 998.56 954.87 909.37 623.57
Deposits 12,811.63 11,462.18 11,063.32 7,038.46
Advances 8,308.34 7,281.86 6,742.30 4,718.28
TOTAL ASSETS 14,618.31 13,148.05 12,606.33 8,306.66
Capital Adequacy Ratios (in %) 0.16 0.15 0.14 0.14
12.69 11.73 11.49 11.91
e
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
CASE STUDY SOLUTION
e
pl
m
Sa
SYNOPSIS
In February 2022, Atul Kumar Goel assumed the role of managing director and chief executive officer
(CEO) at Punjab National Bank (PNB), a critical position in the wake of the bank’s challenges, including
a massive instance of fraud, of ₹143.56 billion1 in 2018, and challenges associated with the amalgamation
n
of the United Bank of India (UBI) and Oriental Bank of Commerce (OBC) in 2020. With over three decades
tio
of experience leading other public sector banks, Goel embarked on the mission to restore PNB’s 128-year
legacy. Faced with the daunting task of restoring the bank’s former reputation and glory, Goel explored
strategies for implementing a comprehensive plan to bring PNB back on the track of sustainable growth.
lu
Which strategy would reshape the bank’s trajectory and ensure sustainable growth while also reviving
PNB’s legacy and heritage?
So
OBJECTIVES
• Assess the aftermath of a significant banking fraud and explore recovery strategies.
• Investigate the challenges in merging two or more national organizations.
• Explore the role of top management in retaining customer trust during a disaster.
• Gain insight into evolving customer needs in the digital economy era.
The Case Solution Starts From page 6
, e
pl
m
Sa
n
tio
lu
So
ASSIGNMENT QUESTIONS
1. How did PNB suffer as a victim of India’s biggest banking fraud? What did PNB do to regain its lost
image among stakeholders?
2. What are the strategies for a successful amalgamation? Do you think the amalgamation with OBC and
UBI was successful?
3. What critical issues did PNB confront following the amalgamation with OBC and UBI?
The Case Solution Starts From page 6
,4. Do you agree with the decision of Mallikarjuna Rao, PNB’s previous managing director and CEO, to
undertake organizational restructuring prior to IT integration?
5. What were the various options in front of Goel to revive PNB, and what did he choose to do? Do you
agree with Goel’s turnaround initiative to bring PNB on track?
e
pl
m
Sa
n
tio
ANALYSIS
lu
So
1. How did PNB suffer as a victim of India’s biggest banking fraud? What did PNB do to regain its
lost image among stakeholders?
Detection of fraud and the resulting regulatory punishment impacts the interaction among banks and
companies by impacting credit and operational risks. These occurrences in companies cause banks to be
concerned about a company’s future cash flows and profitability, influencing their credit behaviour toward
the company and reducing loans to similar companies.
Specifically, a rise in incidents of fraud might alter the company’s legal liability and lead to reputation loss.
To preserve its interests, the bank might not provide the business with favourable loan conditions and may
devalue available data on the firm’s performance. Second, most corporate fraud disclosures are tied to
unlawful activities. Unlike regulators, banks have to take legal action when corporate malfeasance is
discovered. This might result in increased punishment of the company from the authorities, public
The Case Solution Starts From page 6
,5. What were the various options in front of Goel to revive PNB, and what did he choose to do?
Do you agree with Goel’s turnaround initiative to bring PNB on track?
e
pl
m
Before taking over the charge of the bank, Goel had closely observed PNB’s fight to regain its position,
which started with overcoming the ₹143.56 billion fraud scandal in 2018. Despite the fraud and money
Sa
laundering lawsuit involving disgraced diamond trader Nirav Modi, the bank was willing to reap the
benefits of amalgamation after massively integrating businesses, people, and technology.25
After acquiring two nationwide banks, navigating the banking system became an intricate balancing act for
PNB. Although PNB had grown into a total business, it had to hunt for alternative revenue via different
n
cross-selling, such as insurance and other non-core activities. Asset quality was an issue for all banks, and
tio
lu
So
The Case Solution Starts From page 6
, EXHIBIT -3: PUNJAB NATIONAL BANK POST-AMALGAMATION FINANCIALS
AND KEY RATIOS (IN ₹ BILLIONS)
Parameters Mar 2023 Mar 2022 Mar 2021 Mar 2020
TOTAL NET WORTH 998.56 954.87 909.37 623.57
Deposits 12,811.63 11,462.18 11,063.32 7,038.46
Advances 8,308.34 7,281.86 6,742.30 4,718.28
TOTAL ASSETS 14,618.31 13,148.05 12,606.33 8,306.66
Capital Adequacy Ratios (in %) 0.16 0.15 0.14 0.14
12.69 11.73 11.49 11.91
e
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
