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IDBI Bank discloses fraud of $119 million, shares fall

IDBI Bank discloses fraud of $119 million, shares fall
Highlights

 IDBI BankBSE -5.25 % Ltd said on Tuesday fraudulent loans of 7.72 billion rupees ($118.8 million) were issued from five of its branches in the states of Andhra Pradesh and Telangana, sending its shares lower on Wednesday. 

IDBI BankBSE -5.25 % Ltd said on Tuesday fraudulent loans of 7.72 billion rupees ($118.8 million) were issued from five of its branches in the states of Andhra Pradesh and Telangana, sending its shares lower on Wednesday.

Some of the loans, which were issued during fiscal years 2009-2013 for fish farming businesses, were 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 processing and disbursing the loans by two of its officials. The lender dismissed one of the officials, while the other official had already retired, it said.

India's federal investigation agency, 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.

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

IDBI shares fell as much as 3.5 percent to 73.6 rupees by 0512 GMT, while the index for public sector lenders Nifty PSU Bank index dropped as much as 1.8 percent.

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