Syndicate Bank shares fell as much as 8.5 per cent to a low of Rs. 132.25 on Monday after the Central Bureau of Investigation arrested the state-run lender’s chairman SK Jain in an alleged bribery case.
The CBI has registered two cases against Mr. Jain and 11 others including CMD and directors of two Delhi-based private firms – Bhushan Steel and Prakash Industries – under relevant sections of Prevention of Corruption Act, 1988 and criminal conspiracy.
Bhushan Steel shares fell as much as 9.2 per cent to Rs. 359.20, while Prakash Industries crashed 20 per cent to Rs. 89 in early trade. The three stocks underperformed the broader Nifty, which traded with 0.7 per cent gains.
Mr. Jain was arrested by the CBI on Saturday for allegedly negotiating with Bhushan Steel for an illegal gratification of Rs. 50 lakh in return for granting credit extension to that company as it had defaulted on the payment of loan installments amounting to crores.
The CBI claims to have recovered cash to the tune of Rs. 21 lakh from Mr. Jain’s residence besides gold worth Rs. 1.68 crore and fixed deposits of up to Rs. 63 lakh.
The entire racket was busted after CBI monitored the activities of Mr. Jain for last six months.
Deven Choksey, managing director of KR Choksey Securities told that many mid-sized PSU banks are vulnerable to such issues.
“Unfortunately, this is how PSU banks operate in the country. There are serious challenges on the management side… It makes more sense to stay with large-sized banks, where the quality of management is proven,” he added.