India's ICICI Bank shares tumble on probe reports, RBI fine (updated)

Videocon Industries (India)

02/04/2018 06:50

(Updates share price, adds background)
    By Jessica Kuruthukulangara
    BENGALURU, April 2 (Reuters) - Shares of ICICI Bank
 ICBK.NS , India's third-largest lender, plunged 7 percent 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 percent 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.  urn:newsml:reuters.com:*:nL3N1RD03Z 
    The probe also involves ICICI officials and Videocon Group
 VEDI.NS , a consumer electronics and oil and gas exploration
company. 
    Last week, ICICI described as "malicious and unfounded"
rumours circulating online alluding to conflicts of interest in
ICICI's lending to Videocon and alleging that Kochhar favoured
the conglomerate.  urn:newsml:reuters.com:*:nL3N1RA52Z
    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  PNBK.NS  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.  urn:newsml:reuters.com:*:nL3N1RA56D
    Sentiment was also negative after the central bank fined
ICICI 589 million rupees ($9.1 million) for not sticking to
rules around the sale of government securities.  urn:newsml:reuters.com:*:nL3N1RB44N
    "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. 
    ($1 = 65.1100 Indian rupees)

 (Reporting by Jessica Kuruthukulangara in Bengaluru; 
Writing by Euan Rocha
Editing by Subhranshu Sahu and Stephen Coates)
 ((euan.rocha@tr.com; +91 22 6180 7257; Reuters Messaging:
euan.rocha.reuters.com@reuters.net))