UCO Bank Falls to 11-Year Low as India Probes Former ChairmanBy
Former chairman, others allegedly cheated bank of $95 million
Bank reported losses for nine straight quarters through Dec.
UCO Bank dropped to its lowest in 11 years after India’s federal investigative agency registered a case against UCO’s former chairman for cheating the state-run lender.
Shares of the Kolkata-based bank fell about 6 percent to 20.90 rupees in Mumbai on Monday, the lowest close since April 12, 2007. The 10-member Bankex index rose 0.3 percent.
The Central Bureau of Investigation registered a case against Arun Kaul, a former chairman of UCO Bank, and some others for cheating the lender of about 6.21 billion rupees ($95 million), according to a text message from a CBI spokesman Saturday. The bank had reported losses for nine straight quarters through Dec. 31 as it had to make provisions for soured debt that remains higher than the banking system’s average.
A call to UCO Bank’s corporate headquarters wasn’t immediately answered on Monday. Kaul couldn’t be reached when tried on his mobile phone.
The probe at UCO Bank along with investigations into a $2 billion fraud uncovered at Punjab National Bank and allegations of impropriety over a $500 million loan made by ICICI Bank Ltd. is raising questions about corporate governance standards and credit-underwriting procedures at lenders in Asia’s third-largest economy.
Rising defaults have enraged the public, piling pressure on Prime Minister Narendra Modi to act against the perpetrators and reinforce his anti-graft image before elections next year.