Government bank shares fall as new scam involving Dena Bank, OBC surfaces

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    Government bank shares fall as new scam involving Dena Bank, OBC surfaces
    Close on the heels of the Chairman of Syndicate Bank being arrested on bribery charges involving corporates in India, another scam involving government owned banks has surfaced.

    According to reports in the DNA, the Union Finance Ministry has unearthed a scam involving public sector banks. The ministry fears the Mumbai-based branches of Oriental Bank of Commerce and Dena Bank have misappropriated funds to the tune of Rs 436 crore.

    According to the DNA report a branch manager at Dena Bank mobilised fixed deposits (FDs) to the tune of Rs 256.49 crore from seven corporates. This was mobilised using middlemen. All formalities relating to opening FDs were done by middlemen.

    "Once the FD was raised, fake fixed deposit receipts (FDRs) were sent to the organisations. The bank will retain the original FDR. The middlemen will then propose sanctioning of loans to some other organisations against the original FDRs. Loans are then disbursed in the third party accounts of these organisations. This scam was detected a month back," the DNA report adds.

    Stocks of PSU banks were under pressure following the scams involving Dena Bank and Oriental Bank of Commerce (OBC). OBC was down 3 per cent and Dena Bank also dropped 3 per cemt.

    According to a CNBC TV 18 interview posted on moneycontrol.com SL Bansal, chairman and managing director, Oriental Bank of Commerce says the bank has recovered Rs 110 crore of the entire Rs 180 crore that were misappropriated in the fixed deposit (FD) scam and the investigation has been referred to the case to the Central Bureau of Investigation (CBI).

    GoodReturns.in

    Read more about: dena bank syndicate bank scam obc
    Story first published: Wednesday, August 20, 2014, 11:28 [IST]
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