Reuters Market Eye - Syndicate Bank Ltd (SBNK.NS) falls as much as 6.5 percent to its lowest since May 21.
The lender's chairman was arrested over allegations of taking bribes to grant loan extensions to a company.
The stock had already slumped 18 percent in July on profit-taking in mid-cap shares.
Despite July falls, Syndicate Bank was up 52.5 percent this year as of Friday.
Reporting by Indulal PM