Shares of a small-cap payments bank plunged 7.5% on Thursday’s early trades to reach an intraday low of ₹ 305.50 apiece. This happened after the company made disclosure about the misappropriation of funds, cheating and forgery.
Fino Payments Bank (BO: FINY ) is an Indian scheduled commercial bank, engaged in providing digital-based financial services. It offers savings accounts, current accounts, loans, insurance services, BPay, mobile banking and a wallet application. It has a Pan-India distribution network.
According to an exchange filing, the bank received complaints from one of its client in Mumbai and some of its merchants, distributors and other individuals in Gujarat and Maharashtra through email for non-receipt or repayment of funds pertaining to potential fictitious schemes allegedly floated by some of the employees of the bank, in their personal capacity.
The bank appointed KPMG to conduct a detailed independent investigation of the incident(s). Post initial investigation, the bank took the necessary steps including the filing of a police complaint, reporting to regulatory authorities and so on.
On the face of it, the investigation indicates that there were unauthorised actions and misrepresentation by the alleged staff, contributing to negligence and/ or potential collusion on the part of complainants with respect to abnormalities and non-adherence with regular processes of the Bank, which seems to have been potentially ignored by the complainants.
As of now, the bank believes that none of the complainants have filed any complaint against the bank for pursuing the recovery with any law enforcement agency.
While the investigation is still going on, the bank is of the view that there is no liability or impact on it and that it has neither benefited nor is at a loss due to the incidents. It added that it will keep the stock exchanges informed regarding further developments.
With a market capitalization of ₹ 2,749 crores, Fino Payments Bank is a small-cap company. It has a low return on equity of 1.69%. Its shares were trading at a price-to-earnings ratio (P/E) of 37.32, which is higher than the industry P/E of 15.98, indicating that the stock might be overvalued as compared to its peers.
The company’s promoters hold a 75.00% stake in it, followed by retail investors with 13.24%, foreign institutions with 6.29%, mutual funds with 5.24% and other domestic institutions with 0.23%.
Written by Simran Bafna
The post Bank stock falls up to 7.5% after disclosure about misappropriation of funds, cheating and forgery appeared first on Trade Brains.
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