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Uncertainty and fear over the PNB scam probe led to a crash in the final hour of trading at India’s premier markets.
The Sensex and the Nifty slumped sharply during the last half hour of Tuesday’s trading, with big domestic traders abandoning long-held positions. This was triggered by news that ICICI Bank’s Managing Director Chanda Kochhar and Axis Bank MD Shikha Sharma had been summoned for questioning by Mumbai’s Serious Fraud Investigation Office (SFIO), in connection with the PNB scam probe.
Foreign investors are unnerved by the fact that the involvement of even large private banks in the scam was coming to light, market experts said. “Fear over the PNB scam is growing among institutional investors,” said Sudip Bandyopadhyay, Group Chairman, Inditrade Capital.
The Sensex fell 429 points or 1.27 per cent, to close at 33,317. The Nifty closed at 10,429, down 109 points or 1.06 per cent. The Nifty Bank index fell 370 points or 1.49 per cent to close at 24,448.
News reports said the SFIO had asked senior executives of 31 banks, which had dealt with prime accused Nirav Modi and Mehul Choksi to appear before them. Fear that the scam amount scam could exceed the estimated $2 billion has undermined confidence in the banking system.
ICICI Bank is believed to have extended a loan of ₹1,000 crore and Axis Bank ₹700 crore to Choksi’s Gitanjali Gems in 2017. SBI officials have also been called for questioning, according to reports.
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