Mumbai: The Central Bureau of Investigation (CBI) on Wednesday arrested CEO of LIC Housing Finance Ramachandran Nair and seven others including three top officials of public sector banks in connection with an alleged housing finance racket.
Rajesh Sharma, Chairman and Managing Director of Mumbai-based firm Money Matters Ltd and two of its employees -- Suresh Gattani and Sanjay Sharma -- were among those arrested, CBI said.
The officials allegedly colluded with the firm to sanction large scale corporate loans, overriding mandatory conditions for such approvals along with other irregularities.
"The CBI has busted a racket wherein a private financial services company, its CMD and other associates were allegedly bribing senior officials of public sector banks and financial institutions for facilitating large scale corporate loans," CBI spokesman R K Gaur said in a statement.
"They were also gathering confidential business information from financial institutions," Gaur said. Searches were conducted at various locations in Mumbai, Delhi, Chennai, Jaipur, Kolkata and Jalandhar, which have resulted in seizure of incriminating documents.
The CBI has registered five separate cases in this regard and investigation is in progress, the spokesman said.
Panic selling in the last leg of the trade saw the markets dip sharply. According to media reports, CBI conducted raids in prominent finance companies like LIC Housing Finance and Central Bank of India with regards to a multi-crore housing scam. As news of the raids spread, banking and realty stocks slumped.
The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened at 19,735.28 points, closed at 19,412.78 points (provisional), down 279.06 points or 1.42 percent from its previous close at 19,691.84 points. It touched an intra-day low of 19,375.92 points.
In the morning, the markets had a volatile session of trading. The condition improved at once when the Asian indices started moving upwards as the Korean situation and the policy tightening in China eased.
The Sensex marched ahead to touch the day's high of 19,835. However, the market lost its steam and pared some of its gains to trade range bound within a close 100 points. Mid-afternoon, the benchmark index slipped into the red. The index almost pared its losses when the CBI raid reports came in.
In the European markets, DAX and FTSE are the only indices trading in the green, gaining 0.1% each. CAC is trading down 0.4%. The US index futures indicates that Dow may rise nearly 32 points at the opening.
Closer home, the banking scrips that took the beating were Canara Bank down 5%, Union Bank, Bank of India shedding 4% and Federal Bank, SBI, ICICI Bank and Axis Bank losing 3% each. The tainted bank - Central Bank of India closed 9% down.
In the realty space, D B Realty was the biggest loser ending down 16% followed by Orbit Corporation and HDIL shutting 8% and 6% each. LIC Housing Finance, the scrip in limelight ended that day, down 21%
On the BSE sectoral chart, FMCG was the only index which closed in the green, gaining 0.04%.The other indices which were leat affeacted were Auto, Health care and Consumer Durables losing 0.1%-0.3%.
Source: Business Standard & Agencies