Canara Bank slips 4% as CBI charges ex-CMD in loan case
It is alleged that the loan, which was sanctioned in December 2013, turned into NPA.
By ETMarkets.com | Updated:
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NEW DELHI: State-owned lender Canara Bank slipped over 4 per cent on Tuesday on news that the CBI has charged its former CMD and others with cheating and forgery in a loan default case.
The stock closed the day 3.84 per cent down at Rs 254.15 on BSE.
"The CBI had registered a case on January 27, 2016, on the allegations that the company, dealing in wholesale and retail trading of silver jewellery and articles, diamond, gold jewellery, imitation jewellery, gift items, crockery items etc had cheated Canara Bank to the tune of Rs 68.38 crore (approximately) through its accounts at Kamla Nagar, New Delhi, branch of the bank," PTI reported quoting CBI spokesperson Abhishek Dayal.
It is alleged that the loan, which was sanctioned in December 2013, turned into NPA.
Of late, public sector banks have been hogging limelight for all the wrong reasons, with PNB's over Rs 12,000 crore shady transactions topping the chart. The developments have led to an erosion of confidence among investors, triggering a major selloff in PSU banking stocks.
Nitasha Shankar, Head-Research, Yes Securities, said it's "better to be safe than sorry" when it comes to investing in PSU banking stocks. "Aspects such as poor quality of assets or loans advanced, instances of mismanagement and lack of autonomy make the fundamentals of most players in this space unattractive," she added.
Market analyst Ambareesh Baliga said: "The PNB scam made the sector look like a leaking boat. Though efforts were made on one side to plug the leak, some other weak link was giving way to another gaping hole. There was also a fear whether such undiscovered scams could be lurking in a few other PSU Banks as the controls and culture is more or less similar across various PSU Banks."
The stock closed the day 3.84 per cent down at Rs 254.15 on BSE.
"The CBI had registered a case on January 27, 2016, on the allegations that the company, dealing in wholesale and retail trading of silver jewellery and articles, diamond, gold jewellery, imitation jewellery, gift items, crockery items etc had cheated Canara Bank to the tune of Rs 68.38 crore (approximately) through its accounts at Kamla Nagar, New Delhi, branch of the bank," PTI reported quoting CBI spokesperson Abhishek Dayal.
It is alleged that the loan, which was sanctioned in December 2013, turned into NPA.
Of late, public sector banks have been hogging limelight for all the wrong reasons, with PNB's over Rs 12,000 crore shady transactions topping the chart. The developments have led to an erosion of confidence among investors, triggering a major selloff in PSU banking stocks.
Nitasha Shankar, Head-Research, Yes Securities, said it's "better to be safe than sorry" when it comes to investing in PSU banking stocks. "Aspects such as poor quality of assets or loans advanced, instances of mismanagement and lack of autonomy make the fundamentals of most players in this space unattractive," she added.
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Market analyst Ambareesh Baliga said: "The PNB scam made the sector look like a leaking boat. Though efforts were made on one side to plug the leak, some other weak link was giving way to another gaping hole. There was also a fear whether such undiscovered scams could be lurking in a few other PSU Banks as the controls and culture is more or less similar across various PSU Banks."
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