The ICICI Bank stock posted its biggest single-day drop in nearly three years amid the ongoing investigations into its lending practices.
Shares of the country’s third-largest lender closed at Rs 261.9, down Rs 16.5, or 5.93 per cent on the BSE, the most since August 24, 2015.
The market valuation eroded by Rs 104.52 billion to Rs 1.68 trillion on the BSE. The fall came against the backdrop of the Central Bureau of Investigation (CBI) launching a preliminary enquiry into alleged links between ICICI Bank’s Chief Executive Officer Chanda Kochhar (pictured) and the Videocon group.
As per the reports, the CBI is verifying allegations of corruption and a possible nexus between Videocon group Chairman Venugopal Dhoot and Chanda Kochhar’s husband, Deepak Kochhar. Last week, ICICI Bank termed the reports of conflict of interest “malicious and unfounded” and denied Chanda Kochhar favouring the conglomerate.
In a statement, the bank’s board said “there is no question of any quid pro quo/nepotism/conflict of interest” in its lending decisions. The lender said no single executive had the ability to influence credit decisions at the bank. The bank’s board and chairman had also expressed confidence in the CEO.
Besides the CBI probe, the bank is also facing a penalty of Rs 589 million imposed by the Reserve Bank of India (RBI) for flouting rules over the sale of government securities. This is also weighing on investor sentiment.
The shares of IDBI Bank also dropped 4 per cent on the BSE but recovered to end 1.6 per cent lower amid reports that the RBI had written to the finance ministry expressing concern over the bank’s poor financial health.