Punjab National Bank has reported a fraudulent transaction of USD 1.77 billion (Rs 11.395 crore) which is part of its contingent liabilities. In case the liability crystallizes, the bank will have to pay a heavy price. These liabilities are off balance sheet items like letter of credit , guarantees , derivative contracts etc. The latest case of PNB once again raises the danger of rising contingent liabilities in the Indian banking sector. In fact , the foreign banks operating in India have a disproportionate share in the contingent liabilities. The foreign banks have a 50 per cent share in the Indian banks' contingent liabilities as per figures of 2016-17. Let's analyse the contingent liabilities of the banking sector.