IDBI bank admits insider role in Rs 772 crores fraud; shares tumble by 3 percent

Mumbai: IDBI bank has admitted that the bank's CGM and GM were involved in a scam in Andhra Pradesh.

The bank informed exchange houses that Rs 772 crore had been sanctioned as loans for pisciculture projects between FY2009-13.

The loans were disbursed from five branches of the bank located in Basheerbagh in Hyderabad, Guntur, Rajahmundry, Bhimavaram and Palangi.

"It was later discovered that some of these loans (52 aggregators with Principal outstanding of Rs.772 cr) 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," said the bank in a note.

The bank was cheated by its own empanelled valuers, who inflated the value of collateral securities. While conducting a Staff Accountability exercise the bank found major lapses in the processing of loans. The bank's internal vigilance team alleged Battu Rama Rao, a General Manager and Shri R.Damodaran, Ex Cheif General Manager's as one's playing a key role in the lapse.

While Rama Rao was dismissed from service, Damodaran had already retired.

The bank said that it is still pursuing recovery processes. Five separate complaints have been registered with the CBI for investigation. The Bank has already provided said that it has a "100%" provisioning in these accounts and hence there would no impact of these accounts on the profitability / balance sheet of the Bank.

The bank had been posting decent gains for retail investors on the stock exchanges in comparison with others like State Bank of India, Union Bank, Punjab National Bank etc.

The bank's shares took a hit of Rs 2.50 at 13:30 hours to trade at Rs 73.75.

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