New Delhi: India's federal investigating agency said it arrested Ramachandran R. Nair, chief executive officer of LIC Housing Finance, and officials of some state-run banks following a probe into bribes and improper loan disbursals.
Rajesh Sharma, chairman of Mumbai-based brokerage Money Matters Financial Services, was also taken into custody, P. Kandaswamy, the Central Bureau of Investigation's (CBI) inspector general for Mumbai Zone 2, said yesterday. Some executives at the Life Insurance Corp of India (LIC), Bank of India, Central Bank of India and Punjab National Bank were also arrested.
"This will definitely dent market confidence and the credit-worthiness of financial institutions," said Gurunath Mudlapur, director at Atherstone Capital Markets, which provides investment banking services in Mumbai. "Financial institutions are meant to be driven by trust and transparency."
Shares of LIC Housing dropped a record 18 per cent at the close of trading in Mumbai, before the announcement. Money Matters fell by its 20 per cent limit. The benchmark Sensitive Index slumped 1.2 per cent as DLF led Indian real estate stocks lower. LIC Housing spokesman Sudipto Sil wasn't immediately available for comment. Vipin Anand, chief of corporate communications at Mumbai-based Life Insurance Corp didn't reply to an e-mail or phone.
"The CBI has busted a racket wherein a private financial services company, its CMD and other associates were allegedly bribing senior officials of public sector banks and financial institutions for facilitating large scale corporate loans," according to the agency's statement.
