Canara Bank Shares Tumble After Police File Charges In New Fraud Case

 The Central Bureau of Investigation (CBI) filed charges on Monday  against a former chairman of state-run Canara Bank and others over  allegations that the officials helped a company defraud the bank of  about $10.5 million taken in loans over four years ago.

The CBI  also said it had arrested seven people - including two former managers  of the country's top lender, State Bank of India, a former manager of  Canara Bank and directors of a Kolkata-based private company - in a  separate "bank fraud" case of about 150 million rupees ($2.3 million).

India  has cracked down on shady loans in its mammoth state banking sector  after a more than $2 billion fraud was uncovered at state-run Punjab  National Bank (PNB) earlier this year.

As of last September, state  banks held about 87 percent of the Indian banking system's 9.46  trillion rupees (about $147 billion) of soured loans that are  non-performing, restructured or rolled over. 

In the December 2013  case, the CBI, the federal investigating agency, said charges were  filed against five former Canara Bank officials including former  chairman and managing director R.K. Dubey, two former executive  directors of the bank and a current bank official.

A Delhi-based private company and its directors were also charged, the CBI said in a statement.

Canara Bank did not immediately respond to a request for comment. Dubey was not immediately available for a comment.

The  CBI, which had first registered the case in 2016, said a 683.8 million  rupee loan to the Delhi-based jewellery company, Occasion Silver Pvt  Ltd, turned bad within a year of the bank giving it the loan.

"The  funds were siphoned off through a chain of alleged bogus transactions  facilitated by fake sister concerns, family members and bank officials  including the top executives," the CBI said.

"It was also revealed  during investigation that there was an alleged nexus between the bank  officials with the private persons which led to the perpetration of the  fraud," the agency said.

Reuters could not immediately locate contact details of Occasion Silver Pvt Ltd.

In  the alleged PNB fraud - the biggest in India's banking history - the  bank has accused two jewellery groups, one controlled by diamond tycoon  Nirav Modi and the other by his uncle, Mehul Choksi, of colluding with  rogue bank employees to secure credit overseas. 

The key accused in that case have denied any wrongdoing.

(Reuters)