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Bank of Baroda fell as much as 7 per cent on Monday.
At 12 pm, the stock was down 4.17 per cent or Rs 7.60 at Rs 174.70 on the BSE.
The lender said on Monday it had suspended two senior bank employees at one of its branches in Delhi as part of a police investigation into suspected money laundering involving some Rs 6,000 crore ($927 million).
Executive director BB Joshi told Reuters the bank, India's second largest state-run lender, does not expect any financial loss due to the alleged fraud
This puts questions on the bank's systems which has failed to detect such transactions, said IDFC
The bank always traded at premium to other state-run banks for its cleaner balance sheet, these allegations would dent the bank's image thereby putting risk on the premium it enjoys over peers, IDFC added.
Bank of Baroda trades near its book value, a hefty premium to other state-run banks, according to Eikon data.
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