PSU banking stocks recover after Dena Bank, OBC scams

By Sunil Fernandes
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     PSU banking stocks recover after Dena Bank, OBC scams
    Shares in PSU Banking stocks recovered after reports of scams in Oriental Bank of Commerce and Dena Bank were unearthed.

    PSU banking stocks like Bank of India and Union Bank of India led the rally, while other notable winners were IDBI Bank and Bank of Baroda.

    Meanwhile, PTI has reported that the government has initiated a forensic audit at the state-run Oriental Bank of Commerce and Dena Bank after unearthing of a suspected scam, wherein the lenders allegedly misappropriated funds worth Rs 436 crore from their fixed deposit customers.

    "A forensic audit has already been ordered," Financial Services secretary GS Sandhu told reporters here today, when asked about the alleged scam, adding some suspensions have been initiated by the authorities in this regard.

    He, however, was quick to add that it is a case of aberration at the individual officer level and not systemic.

    "These are instances which have happened at the lower level, at the branch level because of lack of due diligence or non-adherence to the norms and procedures," Sandhu said.
    The lenders are alleged to have indulged in siphoning off the money (Rs 180 crore by OBC and Rs 256 crore by Dena Bank) received as fixed deposits.

    "Persons responsible are being taken to task, there have been some suspensions, transfers, and the investigations are on," Sandhu told reporters at an event organised by real estate body Nardeco.

    The Finance Ministry official added that the government has also flagged the issue of risk management by state-run banks, saying deputy GM and GM-rank officers will have to undergo a course on risk management before being considered for promotion.

    The development comes within a fortnight of the arrest of Syndicate Bank chairman and managing director SK Jain in a corruption case for allegedly receiving Rs 50 lakh from Bhushan Steel and another company for expanding their credit limit.

    With inputs from PTI

    Read more about: dena bank oriental bank
    Story first published: Thursday, August 21, 2014, 12:30 [IST]
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