Shares of state-owned Andhra Bank fell over 15 per cent to hit a 15-year low after the Enforcement Directorate (ED) filed a charge sheet against a former director in a separate money laundering case.
The Andhra Bank stock closed at Rs 35.85, down 6.88 per cent on the BSE, its lowest after August 2003. The stock fell as much as 17.1 per cent intra-day.
The ED on Friday filed a supplementary prosecution complaint (charge sheet) against former Andhra Bank director Anup Prakash Garg in connection with a Rs 5,000-crore bank fraud involving the Vadodara-based Sterling Biotech (SBL) of the Sandesara Group. Authorities have accused senior executives of Sterling and Garg of “criminal conspiracy” and falsifying accounts to allow the company to raise much larger loans from Andhra Bank and other lenders than it would have been able to otherwise. The Central Bureau of Investigation (CBI) had filed a complaint in the case last October.
Meanwhile, Andhra Bank, in a statement to the exchanges, clarified that the bank was the lead bank of the consortium in case of two group companies of Sterling Group and the bank's exposure to these companies is Rs 578.57 crore (fund-based) and Rs.568.35 crore (non-fund based) as on date and not Rs 5,000 crore as wrongly reported in a news publication (Business Standard). The bank also said that Anup Prakash Garg was the chartered accountant director nominated by the government under 9(3) (g) of Banking Acquisition and Transfer of Undertakings Act1980 and had held office from October 10, 2006 to October 12, 2009. He was neither an employee nor a whole time Director in the bank at any point of time, the bank clarified.
The bank’s exposure to the Sterling group companies have been classified as non-performing since March 2015, Andhra Bank said, adding it reported last December the accounts as fraud to the Reserve Bank and has also filed a police complaint. “As on December 31, 2017, our fund-based exposure to the group companies is to the tune of Rs 515.19 crore and stands classified as non-performing asset,” said the bank.
In December 2017, the bank reported the group accounts to the RBI as fraud amounting to Rs 515.19 crore, alleging diversion of funds and money laundering on the part of the companies and has already lodged formal complaints with the CBI against the companies.
The Sterling group companies owed a total Rs 5,383 crore to various banks as of end-2016, according to the CBI. All the loans have turned non-performing, the agency said.
The massive Rs 11,400 crore fraud in Punjab National Bank (PNB) and the subsequent unearthing of another fraud of Rs 3,695 crore by Vikram Kothari of Rotomac ball pens, originating at Bank of Baroda, and several willful defaults by industrialists have created a domino effect.
Last month, the CBI registered a case against Delhi-based jeweller Dwarka Das Seth International over fraudulent transactions worth nearly Rs 400 crore.