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India's IDBI Bank discloses 7.72B rupees of fraud

India's IDBI Bank Ltd. disclosed that it detected 7.72 billion rupees worth of fraudulent loans issued by five of its local branches between 2009 and 2013.

The state-run bank said March 27 that the loans were allegedly granted for fish farming businesses against fake lease documents of non-existent fish ponds. The value of collateral securities was also allegedly inflated.

The bank said most of the accounts turned nonperforming from fiscal 2014 onwards. The bank added that it has made 100% provisions for these loans and that it does not expect any further impact of these accounts on its profitability.

The bank was responding to a report that the the country's Central Bureau of Investigation booked Battu Rama Rao, former general manager of the bank, and 30 others for allegedly cheating the bank to the tune of 4.45 billion rupees by availing Kisan Credit Cards and fish farming loans on the basis of fake documents.

The bank said that while conducting staff accountability exercise, it found major lapses in processing and disbursing the loans by two of its officials. The bank said it dismissed Rao, noting that R. Damodaran, former chief general manager, has already retired.

In addition, the bank said it has filed five separate complaints with the CBI to further investigate the cases. The bureau has already registered cases for two complaints.

IDBI Bank's disclosure came more than a month after another state-run lender, Punjab National Bank, said it detected US$1.77 billion worth of "fraudulent and unauthorized" transactions at one of its branches in Mumbai, India.

As of March 28, US$1 was equivalent to 64.88 Indian rupees.