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Andhra Bank sinks to 15-year low amid fraud probe involving ex-director

Reuters  |  MUMBAI 

By and Paul

MUMBAI (Reuters) - India's Andhra Bank, already hurt by an industry-wide spillover of a huge alleged fraud at another lender, saw its shares slide to a 15-year low on Monday after authorities filed new complaints against a former in a separate long-running case.

The Enforcement Directorate, which fights financial crime, said on Friday it had filed additional charges against Anup Garg, a former of state-run Andhra Bank, in connection with a more than 50 billion rupee ($769 million) fraud case involving that was filed last year.

Authorities have accused senior executives of Sterling and Garg of "criminal conspiracy" and falsifying accounts to allow Sterling to raise much larger loans from and other lenders than it would have been able to otherwise.

India's federal police, the (CBI), had filed a complaint in the case last October.

Law enforcement agencies have accused Garg, a who was on the bank's board for three years until October 2009, of receiving bribes from the Sterling executives between 2008 and 2009.

companies owed a total 53.83 billion rupees to banks as of end-2016, according to the CBI. All the loans have turned non-performing, the agency said.

In a stock exchange filing after the close of trading on Monday, Andhra Bank, headquartered in Hyderabad, said it was the lead for two companies to which its total exposure is about 11.5 billion rupees.

The bank's exposure to the companies has been classed as non-performing since March 2015, said, adding it reported last December the accounts as fraud to the Reserve of and has also filed a police complaint.

executives could not be reached for comment when contacted on the board line of the company's Mumbai office. Garg could also not be reached for comment.

A $2 billion fraud disclosed last month in second-biggest has shaken the country's financial sector at a time when Indian banks are battling a near-record $146 billion of soured assets.

After the PNB fraud case, the government has ordered banks to probe all non-performing loans of more than 500 million rupees to see if there was any sign of any fraud.

In a separate case of alleged fraud, the CBI on Monday arrested Hasmukh Shah, who they said was a former and authorised signatory of Forever Precious Jewellery and The agency said late on Monday it would present Shah before a on Tuesday.

Neither Shah nor Forever Precious Jewellery could immediately be reached for comment.

Forever and group company Diamonds have been accused by authorities of defaulting on credit given by several banks. The CBI last year registered multiple cases against Winsome, while the last month ordered the start of bankruptcy resolution proceedings against and Forever.

shares closed 6.7 percent lower at 35.95 rupees, their lowest level since August 2003. The stock fell as much as 17.1 percent during trade.

fell 3.5 percent, its maximum daily limit, to 2.75 rupees ($0.0423).

($1 = 64.9950 Indian rupees)

(Reporting by and Paul; Additional reporting by Krishna N. Das in New Delhi; Editing by Euan Rocha, and Adrian Croft)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, March 12 2018. 23:06 IST