IDBI Bank uncovers fraud of Rs. 7.72 billion, share price falls
Adding to the string of banking system frauds disclosed in the recent times, IDBI Bank announced on Tuesday that it has uncovered fraudulent loans worth Rs. 7.72 billion that were issued from five of its branches in Andhra Pradesh and Telangana.
Following the development, the bank’s share price plunged by over 8 per cent in Wednesday’s trade on BSE. The stock fell to its intraday low of Rs. 69.85 per share and struggled to an intraday high of Rs. 74.80 per share, much below its previous close.
The fraudulent loans were issued by the bank during the fiscal years 2009 and 2013 for fish farming businesses. These loans were obtained on the back of fake lease documents belonging to ghost fish ponds and by overstating the value of the collateral.
The bank traced significant shortcomings in the processing and disbursing of loans by two of its official, one of whom has retired, while one was dismissed from service. The CBI is likely to further probe the fraud.
The stock of IDBI Bank ended at Rs. 72.25 per share, lower by 5.25 per cent on BSE on Wednesday. Meanwhile, S&P BSE Sensex closed at 32,968.68 level, lower by 0.62 per cent and NSE Nifty 50 closed at 10,121.30 level, down by 0.62 per cent.