Syndicate Bank shares are expected to come under pressure on Monday following the arrest of its Chairman and Managing Director Sudhir Kumar Jain by the Central Bureau of Investigation (CBI).
Jain was arrested on Saturday, along with 11 others, for allegedly receiving a bribe of ₹50 lakh to grant credit extension to two private firms — Bhushan Steel and Prakash Industries — said to be embroiled in the coal block allocations case.
The Syndicate Bank scrip had closed at ₹144.65 on the BSE on Friday.
The scrips of the two steel-making firms are also expected to come under pressure as the CBI has named 11 others, including officials of these companies, under relevant sections of Prevention of Corruption Act, 1988 and criminal conspiracy. Neeraj Singhal (Vice-Chairman of Delhi-based Bhushan Steel), Ved Prakash Agarwal (Chairman and Managing Director of Delhi- based Prakash Industries), Vipul Agarwal (Prakash Industries), Pawan Bansal, Vineet Godha, Punit Godha, Vijay Pahuja, Pursotam Lal Totlani and Pankaj Bansal, are the others accused in the case, a CBI official said.
Bhushan Steel scrip had closed at ₹394.85 while Prakash Industries' stock ended at ₹111 on the BSE on Friday
Meanwhile, a special court granted four days police custody of those arrested. It is probably the first time in the recent history that a serving bank Chairman has been arrested in a corruption case. CBI sources mentioned that the agency was keeping an eye on other senior officials of prominent public sector banks.
A CBI statement said that the bank CMD had indulged in negotiations for illegal gratification directly as well as through middlemen for extending undue favour to private companies by granting sanctions to various financial proposals. Acting on a tip-off that the CMD had allegedly been demanding bribes, the CBI mounted surveillance and zeroed in on his brother-in-law Vineet and a Madhya Pradesh-based chartered accountant Bansal, who is in the business of facilitating loans for top corporates.
CBI laid a trap and arrested the two when they were receiving the bribe amount from representatives of the said companies.
In a multi-city raid across 20 places in Bangalore, Bhopal, Mumbai and Delhi, the CBI is said to have seized cash amounting to ₹21 lakh, gold worth ₹1.68 crore and fixed deposit receipts worth ₹ 63 lakh.
Jain, who has been in the banking industry for 26 years, assumed charge as CMD of the bank on July 8 last year. Syndicate Bank reported a seven per cent increase in net profit at ₹485 crore for the quarter-ended June, over the corresponding period last year. Total income for the June quarter was up 17 per cent at ₹5,523 crore.