Union Bank Of India Shares Crash To 11-Year Low On CBI Complaint

Union Bank of India (UBI) shares fell to a more-than 11-year low on Friday after federal police registered a case against a private company for allegedly cheating eight lenders, including Union Bank, out of Rs 1,394 crore ($214 million). The Central Bureau of Investigation (CBI) registered the case against Hyderabad-based Totem Infrastructure and directors after a complaint from Union Bank, which the CBI said had been cheated out of about Rs 314 crore.

Reuters could not reach Totem or its directors for comment.

The case comes after a more-than $2 billion fraud in state-run Punjab National Bank, dubbed the biggest bank fraud in India's history, triggered scrutiny of all soured bank loans for any sign of wrongdoing.

Totem Infrastructure, loans to which became non-performing in June 2012, "allegedly diverted the funds by opening accounts outside the consortium (of eight banks) and through payments of wages by showing excess expenditure and huge stocks", the CBI said in a statement late on Thursday.

The CBI said in a separate statement that the company concerned was Totem Infrastructure.

Union Bank did not respond to requests for comment from either the stock exchange or Reuters.

By 12.49 pm, Union Bank shares were trading 8.3 percent down at Rs 86.85. The stock fell as much as 9.13 percent to touch its lowest price since March 2007.
 

The CBI filed the case on the basis of a complaint filed by UBI which was cheated of Rs.303.84 crore by the firm.

"Loan was taken from a consortium of eight banks including UBI which was the lead bank. Total dues outstanding for the consortium is Rs. 1,394.43 crore. This account became NPA on June 30, 2012 after loan and interest payment default," a CBI official said.

Totem Infrastructure was in the business of road projects, water works and building construction.

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