Mumbai: Shares of ICICI Bank Ltd, India’s second largest private lender by asset, on Monday slumped nearly 6%, its biggest single day drop since August 2015, after the Central Bureau of Investigation (CBI) launched a preliminary enquiry to verify the bank’s Rs40,000 crore loan to Videocon group.

ICICI Bank shares ended at Rs261.90 on BSE, down 5.93%, its steepest fall since 24 August 2015, from previous close. In intraday trade, the stock declined as much as 7% and touched a low of Rs258.90 per share. So far this year, the script fell over 17%.

India’s benchmark Sensex rose 0.87% to 33,255.36 points, while BSE Bankex index was at 27,098.31 points, down 0.37% from its previous close.

CBI has registered a preliminary enquiry against Deepak Kochhar, husband of ICICI Bank managing director and chief executive officer Chanda Kochhar and Venugopal Dhoot, chairman of Videocon group, to verify the Rs40,000 crore loan to the company, Mint reported on Saturday.

“The stock witnessed sharp fall today as sentiments were hurt by the preliminary inquiry executed by the CBI regarding the ICICI Bank and Videocon loan deal. Though the bank has cleared its view on conflict of interest and dismissed allegations against bank’s CEO Chanda Kochhar, market will still wait for the CBI view on the issue post inquiry. The loan controversy can put pressure on stock price in near term," said Satish Sharma, research analyst - fundamental research, Desk Choice Broking.

An Indian Express report published 29 March had alleged conflict of interest in a Rs3,250 crore loan grant to Videocon group by ICICI Bank. The amount was granted as part of Rs40,000 crore loan by a consortium of 20 banks in 2012. Dhoot allegedly gave Rs64 crore in 2010 through a fully owned entity to NuPower Renewables Pvt. Ltd he had set up with Deepak Kochhar and two of his relatives. It is alleged that he transferred proprietorship of the company to a trust owned by Deepak Kochhar for Rs9 lakh six months after he received the loan from ICICI Bank.

ICICI Bank’s board, however, expressed faith in Chanda Kochhar and also the bank’s credit sanctioning system with regard to its dealing with the Videocon Group. Dhoot also denied any dealings with Deepak Kochhar beyond investing Rs2.5 lakh in the latter’s renewable energy business.

“The board has come to the conclusion that there is no question of any quid pro quo/nepotism/conflict of interest as is being alleged in various rumours," the bank said told to the exchanges on 29 March, terming these reports as “malicious and unfounded".

Recently, the Reserve Bank of India slapped a fine of Rs59 crore for violating regulations around selling securities from the held-to-maturity portfolio of the bank’s treasury book.

The bank also lowered the size of ICICI Securities IPO due to under-subscription. ICICI Securities had initially planned to sell shares worth Rs4,017 crore through its IPO and had set a price band of Rs519-520 per share. The share sale opened on 22 March. ICICI Bank was targeting to sell a 24% stake in the brokerage firm through the IPO. However it could manage only 78% subscription, raising Rs3,500 crore from the market

According to Bloomberg data, 50 brokerages have a buy rating on the bank, while one has sell and three have hold ratings.

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