IDBI Bank shares plunge as loan fraud worth Rs 772 crore detected, CBI files cases

IDBI Bank Ltd said fraudulent loans of Rs 772 crore were issued from five of its branches in Andhra and Telangana, sending its shares lower on Wednesday

FP Staff March 28, 2018 13:05:18 IST
IDBI Bank shares plunge as loan fraud worth Rs 772 crore detected, CBI files cases

IDBI Bank Ltd's shares dropped on Wednesday, a day after the Mumbai-traded lender said fraudulent loans of Rs 772 crore ($118.8 million) were issued from five of its branches in Andhra Pradesh and Telangana.

IDBI's scrip was trading 2.95 percent lower at 13:32 pm on the BSE, after falling as much as 3.5 percent to Rs 73.6 rupees by 10:42 am, while the index for public sector lenders, the Nifty PSU Bank index, dropped as much as 1.8 percent.

The Central Bureau of Investigation (CBI), has registered cases for two of the five complaints, relating to branches at Basheerbagh and Guntur, the company said. IDBI continues to pursue all legal actions to recover the dues.

Some of the loans, which were issued during fiscal years 2009-2013 to fish farming businesses, were reportedly obtained against fake lease documents of non-existent fish ponds, and by inflating the value of collateral, the company said.

The company found major lapses in the processing and disbursing of the loans by two of its officials. The lender has dismissed one staffer, while the other has retired, it said.

IDBI Bank shares plunge as loan fraud worth Rs 772 crore detected CBI files cases

Representational image. News18

"It was later discovered that some of these loans (52 aggregators with principal outstanding of Rs 772 crore) were fraudulently obtained by some industrialists who stood as common guarantor for these loans and were referred to as aggregators, by submitting fake lease documents of non-existent fish ponds," the bank said.

Further, empanelled valuers also inflated the value of collateral securities, the bank added.

IDBI also said that it has provided for these loans, to the extent of 100 percent, and hence there will be no further impact of these accounts on profitability or on the balance sheet of the bank.

The bank on Tuesday said it has initiated a quality assurance audit, expected to be completed by April.

With inputs from agencies

Updated Date:

also read

Sensex falls about 100 points, Nifty down at 18,467 on weak global cues
Business

Sensex falls about 100 points, Nifty down at 18,467 on weak global cues

The 30-share BSE Sensex declined 101.03 points to 62,171.65 in early trade. The broader NSE Nifty dipped 24.20 points to 18,459.90

Indian stock market closes at fresh all-time high; Sensex ends at 62,505, Nifty settles at 18,563
Business

Indian stock market closes at fresh all-time high; Sensex ends at 62,505, Nifty settles at 18,563

During the day, Sensex jumped 407.76 points or 0.65 per cent to its lifetime intra-day peak of 62,701.40

Share market bounces back after 3 days of fall; Sensex ends up 274 points, Nifty closes at 18,244
Business

Share market bounces back after 3 days of fall; Sensex ends up 274 points, Nifty closes at 18,244

Equity benchmarks ended with gains on Tuesday after falling for the past three days amid buying in index majors Infosys and Reliance Industries