Canara Bank investigates unit fraud after source of whistleblower complaint

A rickshaw puller walks past the Canara Bank branch in the old quarters of Delhi, India, September 6, 2017. REUTERS/Adnan Abidi

MUMBAI, May 9 (Reuters) – Indian state-owned lender Canara Bank (CNBK.NS) is investigating fraud at its housing finance unit Can Fin Homes (CNFH.NS), after a complaint from a alert highlighted irregularities in some accounts, a direct source said.

The whistleblower letter, sent in late December and also addressed to the Reserve Bank of India and the National Housing Bank, said there had been irregularities at one of the branches.

“We have decided to pursue this complaint given the seriousness of the situation and found that there were frauds on 37 accounts worth 39 million rupees ($504,149.54). We have made provisions of an equal amount,” said the source, who declined to be named as the discussions were private.

False tax return documents had been submitted for these accounts, the source said. An internal committee was still studying the case to learn more about the nature of the fraud.

Canara Band and Can Fin Homes did not immediately respond to requests for comment.

Shares of Canara Bank and Can Fin Home fell 8% and 7% respectively after news reports suggested the central bank may also be investigating the fraud. However, in a regulatory filing, Canara Bank said it had received no information from the regulator regarding such an investigation.

RBI did not immediately respond to a request for comment.

Earlier this month, Canara Bank recorded a net profit of 16.66 billion rupees for the quarter to March, compared to 10.11 billion rupees a year ago.

($1 = 77.3580 Indian rupees)

Reporting by Nupur Anand; Editing by Bernadette Baum

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