Punjab witnessed rapid development in the late 19th century that saw the emergence of a new educated class, which had an ambition of having a Swadeshi Bank.
The idea was first mooted by Rai Mool Raj, who had for long desired that Indians should have their own National Bank. With the objective of creating a bank, that would further the economic intertest of India, Punjab National Bank was registered on 19 May 1894 under the Indian Companies Act.
Punjab National Bank has the unique distinction of being the first Indian bank which was started solely with capital from Indian investors and which is still functioning.
Punjab National Bank opened for business on April 12 1895, with its first branch in Lahore. Sardar Dayal Singh Majithia was its first Chairman and Lala Harkishan Lal its first secretary. Lala Lajpat Rai was the first to open an account in the bank.
The initial authorized capital of the bank was Rs 2 Lakhs, with a working capital of Rs 20,000. The total staff strength was 9 with the total monthly salary of Rs 320.
In 1913, Indian banking industry was hit by a severe crisis. As many as 78 banks failed during this crunch, but Punjab National Bank endured it.
A major scam was detected by PNB at one of its branches in Mumbai, involving illegal transfer of $1.8 billion or over Rs. 11,000 crore. Several fraudulent Letters of Undertaking (LoU) were issued by some senior bank officials to billionaire jeweler Nirav Modi’s firms since 2011, making the bank liable for the amount. Nirav Modi along with his wife, brother and uncle Mehul Choksi, have been charge sheeted by the Central Bureau of Investigation (CBI) for this fraud. Nirav and his family absconded in 2018, just days before news regarding the scam broke out. Former key PNB officials too have been charge sheeted in this case.
Reserve Bank of India has now scrapped banking instruments like Letter of Undertaking (LoU) and Letter of Comfort (LoC). As per the latest merger- Oriental Bank of Commerce (OBC) and United Bank of India (UBI) will be merged be merged with Punjab National Bank (PNB). The merged entity will become the second-largest state-run bank.