Shares of ICICI Bank, India’s third-largest lender, plunged 7 per cent to a five-month low on Monday after media reported its lending practices were the subject of a police investigation.
ICICI Bank’s shares were down 6.3 per cent at 260.75 rupees as of 0541 GMT after declining to 258.80 rupees, their lowest since late October.
Police launched a preliminary inquiry about two months ago into Deepak Kochhar, the husband of ICICI CEO Chanda Kochhar, Reuters reported on Saturday, citing sources.
In a statement, the bank’s board said “there is no question of any quid pro quo/nepotism/conflict of interest” in its lending decisions, and expressed confidence in the CEO.
India’s banking sector is on edge after state-run Punjab National Bank said in February that it had unearthed a roughly $2 billion fraud. The case has stunned financial markets and led to heightened levels of shareholder concern around any wrongdoing at Indian banks.
“While this fine will not have a material impact on earnings, it is negative on sentiment because other banks seem to have interpreted the rules correctly,” said IDFC Securities in a research note to clients. Reuters
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