June 11, 2019 / 2:29 PM / 5 months ago

India's J&K Bank shares slide further on fraud probe allegations

MUMBAI, June 11 (Reuters) - Shares in India’s Jammu and Kashmir Bank Ltd slumped for a second consecutive day on Tuesday, after local media reported that an anti-corruption probe into the bank had uncovered a sizable fraud at the state-run lender.

Shares in the bank closed down 6.72% at 48.55 rupees, after falling 12.4% on Monday, despite the bank stating late on Monday that “there would be no adverse financial implications” from the investigation.

The bank confirmed late on Monday that its headquarters had been raided by the anti-corruption bureau (ACB) of the state of Jammu and Kashmir, after some complaints of alleged malpractices and governance issues within the bank.

Citing unnamed government sources, the Economic Times reported on Tuesday here that the ACB's investigations had uncovered the likely diversion of loans worth 10 billion rupees ($144 million), without giving more details.

Jammu and Kashmir Bank did not immediately respond to requests for comment on the matter.

In a surprise move, the bank on Saturday said that the state government had ousted Parvez Ahmed as its chairman and managing director and appointed R.K. Chhibber, a senior bank official, as interim chairman and managing director.

In a statement to the stock exchange on Monday morning, the bank said its board at a meeting on Saturday had recommended splitting the roles of chairman and managing director to improve transparency.

In a tweet, following his ouster, Ahmed said “Absolutely no regrets. Did my job most diligently, honestly and in the best interest of the institution. Open to scrutiny on each and every transaction I have done during my two decades of functioning in the bank.”

India’s banks have come under increased scrutiny since state-run Punjab National Bank reported a massive $2 billion fraud last year, raising questions around the auditing and regulatory oversight of the country’s banks.

$1 = 69.4259 Indian rupees Reporting by Swati Bhat; Editing by Susan Fenton

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