The heat is on

1 October 2019 By Una Galani Follow @ugalani

An outsize scandal at a Mumbai-based co-operative bank, abetted by poor oversight, has battered confidence. Plummeting share prices, meanwhile, raise questions over the future of private lender Yes Bank, and others. It signals loan pain to come for an already scorched economy.

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Yes Bank shares had fallen 21% to 33 rupees as of 0818 GMT on Oct. 1 as entities related to founder Rana Kapoor continued to cut their stake in the troubled Indian lender. The bank’s stock fell 15% a day earlier, and is down almost 80% since the start of the year.

Shares of Indiabulls Housing Finance fell over one third on Sept. 30. The shadow bank was hit by news of a court notice seeking a probe on allegations its owners have siphoned off funds, and by a central bank move to place lending curbs on Lakshmi Vilas Bank. The pair had agreed to merge in April.

Separately, local media on Sept. 30 said over two-thirds of the Punjab and Maharashtra Co-operative Bank's loan book of 88.8 billion rupee ($1.3 billion) was exposed to debt-ridden real estate development firm Housing Development and Infrastructure. The central bank on Sept. 25 moved to take charge of one of the country's top co-operative banks and imposed strict withdrawal limits.

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