India's J&K Bank shares slide further on fraud probe allegations

Jammu And Kashmir Bank

11/06/2019 15:29

MUMBAI, June 11 (Reuters) - Shares in India's Jammu and
Kashmir Bank Ltd  JKBK.NS  slumped for a second consecutive day
on Tuesday, after local media reported that an anti-corruption
probe into the bank had uncovered a sizable fraud at the
state-run lender.
    Shares in the bank closed down 6.72% at 48.55 rupees, after
falling 12.4% on Monday, despite the bank stating late on Monday
that "there would be no adverse financial implications" from the
investigation.  urn:newsml:reuters.com:*:nBSE1tvZyG 
    The bank confirmed late on Monday that its headquarters had
been raided by the anti-corruption bureau (ACB) of the state of
Jammu and Kashmir, after some complaints of alleged malpractices
and governance issues within the bank.
    Citing unnamed government sources, the Economic Times
reported on Tuesday https://economictimes.indiatimes.com/industry/banking/finance/banking/crackdown-against-corruption-cbi-ed-may-be-roped-in-to-probe-jk-bank-case/articleshow/69733214.cms
 that the ACB's investigations had uncovered the likely
diversion of loans worth 10 billion rupees ($144 million),
without giving more details. 
    Jammu and Kashmir Bank did not immediately respond to
requests for comment on the matter.
    In a surprise move, the bank on Saturday said that the state
government had ousted Parvez Ahmed as its chairman and managing
director and appointed R.K. Chhibber, a senior bank official, as
interim chairman and managing director.
    In a statement to the stock exchange on Monday morning, the
bank said its board at a meeting on Saturday had recommended
splitting the roles of chairman and managing director to improve
transparency.
    In a tweet, following his ouster, Ahmed said "Absolutely no
regrets. Did my job most diligently, honestly and in the best
interest of the institution. Open to scrutiny on each and every
transaction I have done during my two decades of functioning in
the bank."
    India's banks have come under increased scrutiny since
state-run Punjab National Bank  PNBK.NS  reported a massive $2
billion fraud last year, raising questions around the auditing
and regulatory oversight of the country's banks.
    ($1 = 69.4259 Indian rupees)

 (Reporting by Swati Bhat; Editing by Susan Fenton)
 ((swati.bhat@thomsonreuters.com; twitter.com/swatibhat22;
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