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  1. Union Bank of India shares dive to 11-year low as Rs 1,394 crore fraud hits the PSU bank

Union Bank of India shares dive to 11-year low as Rs 1,394 crore fraud hits the PSU bank

Shares of the Mumbai-headquartered state-owned PSU lender Union Bank of India tumbled to 11-year low as Rs 1,394 crore fraud gripped the public sector bank along with seven other bankers.

By: | Updated: March 23, 2018 12:38 PM
The stock of Union Bank of India crashed as much as 9.13% to an 11-year low of Rs 86.05 on NSE on Friday. (Image: Reuters)

Shares of the Mumbai-headquartered state-owned PSU lender Union Bank of India tumbled to 11-year low as Rs 1,394 crore fraud gripped the public sector bank along with seven other bankers. According to a PTI report, the investigative agency Central Bureau of Investigation had booked a Hyderabad-based construction and infrastructure firm Totem Infrastructure Ltd is accused of defrauding an amount worth Rs 1,394 crore lent by a consortium of eight banks including Union Bank of India. A case has been registered against the promoters of Totem Infrastructure Ltd, Tottempudi Salalith and Tottempudi Kavita, PTI reported citing CBI FIR filed by Union Bank of India.

Following the jitters, the stock of Union Bank of India crashed as much as 9.13% to an 11-year low of Rs 86.05 on NSE on Friday. The same level was last seen on 14 March 2007. A massive trading volume has been observed in the shares of Union Bank of India, as at 12:05 am, more than 1.92 crore shares exchanged hands on both NSE and BSE with about 1.76 crore shares on NSE alone. Today morning, shares Union Bank of India opened 5.86% lower at Rs 89.15 on NSE.

Over the pessimism on the so-called fraud, all the components of the benchmark Nifty PSU Bank index were hovering in negative territory with shares of Syndicate Bank, Oriental Bank of Commerce, IDBI Bank, Bank of India, Andhra Bank, Indian Bank, Allahabad Bank and Canara Bank losing 4 to 7%. Shares of top-three PSU banks were also in red. The stock of State Bank of India was down 3.21% to Rs 233.87, the stock of Punjab National Bank was down 3.63% at Rs 93.05 and the shares of Bank of Baroda were down 2.2% at Rs 132 on NSE.

The infra firm Totem Infrastructure Ltd is figured in the list of the biggest tax defaulters released by the Income Tax Department in 2015 with an outstanding tax of over Rs 400 crore, PTI reported. The Union Bank of India had also alleged that the promoters of the company were untraceable, but the agency managed to track them down at their new place of residence and carried out searches there today, PTI report said citing unidentified CBI official. The Central Bureau of Investigation has issued a Look Out Circular against the promoters of Totem Infrastructure Ltd to obstruct them from escaping out of the nation, the report added.

The fraud involving Union Bank of India has come to light just two days after when India’s largest bank by assets State Bank of India was gripped by another banking fraud entailing Chennai-based jeweller Kanishk Gold Pvt Ltd. Shares of State Bank of India erased all the gains in the mid-morning deals on Wednesday when the scandal started getting reported. Broadly, India’s public sector banks have been reeling under immense pressure since the time nation’s second-largest PSU bank Punjab National Bank had informed about the mega banking scam involving diamond merchant Nirav Modi which is claimed as country’s biggest banking fraud so far.

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