The Central Bureau of Investigaiton (CBI) said on Wednesday it had arrested at least eight officials from banks and financial institutions on charges of taking bribes to grant large corporate loans, the country's third big corruption scandal in the past few months.
Officials arrested include the chief executive of LIC Housing Finance, a general manager of state-run Central Bank of India and senior officials at state-run Punjab National Bank and Bank of India, said a joint director of the CBI.
The agency declined to provide financial details of the charges.
"Offices of top management and middle management of various public sector banks and financial institutions...were receiving illegal gratification," P Kandaswamy said at a news conference.
He said the officials received bribes from a private finance services company, Money Matters, which acted as a "mediator and facilitator" of corporate loans and other facilities.
Central Bank of India, Punjab National Bank, Bank of India and LIC were not immediately available for comment.
Analysts said the news would hammer stocks of the companies mentioned in the charges.
"Very clearly, as names come out, it will impact stocks. Individual stocks will be impacted instead of across the market," Arjun Kejriwal, strategist at research firm KRIS said.
The CBI has registered five separate cases on charges of corruption in an ongoing investigation, Kandaswamy said.
Corruption has long been a major problem in Asia's third-largest economy. The CBI revelations come on the heels of a telecoms scandal that has forced India's telecoms minister to resign and has paralysed the country's Parliament.
The Commonwealth Games, held in October, were also riddled with corruption allegations. The head of the organising committee has since been forced to resign.
India was ranked 87th in Transparency International's 2010 ranking of nations based on the perceived level of corruption. India lies behind rival China, which is in 78th place.
Meanwhile, the BSE benchmark sensex on slipped slipped 232 points in a highly volatile trade, with banking and realty stocks taking a big hit on reports of an alleged housing scam. (with inputs from PTI)