Simbhaoli Sugars and OBC Share Price Plunge: All You Need to Know

Banks, the backbone of Indian Economy, are shaken with big scams. Where Punjab National Bank (PNB) and Nirav Modi are in the midst of the financial storm worth Rs 11,400 crore, the new scams have come up of another PSU Bank, Oriental Bank of Commerce (OBC). Two big cases in three days were registered by the CBI on the complaints from the Oriental Bank of Commerce against Simbhaoli Sugars and Dwarka Das Seth.

Additionally, in the last 10 days, the CBI has filed more than seven cases on complaints filed by banks, that includes Punjab National Bank, State Bank of India, Oriental Bank of Commerce, Bank of Maharashtra and Telangana Grameena Bank. Most of these cases relate to conspiracy and cheating, and some involve employees of the bank.

Several public sector banks have begun conducting reviews and taking initiatives to centralise all the processes  including SWIFT to link them to core banking solutions (CBS).

Simbhaoli Sugars Defrauding Case

Today OBC stock has fallen approximately 11% after the Central Bureau of Investigation (CBI) had filed a fraud case against against Simbhaoli Sugars’ chairman and managing director, Deputy Managing Director Gurpal Singh, who is also the son-in-law of Punjab CM Amarinder Singh, chief executive officer, chief financial officer and directors for allegedly defrauding OBC.  The state-run Oriental Bank of Commerce will incur the alleged losses of Rs 1.09 billion due to the fraud related with the sugar firm, Simbhaoli Sugars.

As per OBC, Simbhaoli Sugar has “dishonestly and fraudulently diverted” a Rs. 1.48-billion-loan sanctioned in 2011 for financing cane farmers for private use. Overall, the loan of an amount of Rs. 97.85 crore was sanctioned for financing individual, joint liability groups; self help groups (SLG) and sugarcane farmers under the tie-up arrangement under the RBI Scheme to 5762 sugarcane farmers supplying sugar produce to the company.  The agency had also conducted searches at eight locations, that includes one in Hapur in Uttar Pradesh, one in Noida, and six locations in Delhi.

Moreover, Oriental Bank of Commerce had sanctioned another corporate loan of Rs. 110 crore to Simbhaoli Sugars on 28 January 2015, to pay its outstanding loan of Rs. 97.85 crore. Both of them turned NPA on 29th November 2016.

Dwarka Das Seth International Case

CBI got a complaint from the Oriental Bank of Commerce for Rs 390 crore scam involving Delhi-based diamond exporter, Dwarka Das Seth International. This firm had availed credit facilities with the help of some OBC bank officials.

OBC Share Price Chart

OBC Share Price has touched 52 week low, and are in a downward trend. The long term investors can “Hold” the stock with  the horizon for more than a year.