Sadly, senior citizens and retirees who invest savings of their lifetime because some bank offers half to one percent higher interest are worst hit when a bank gets hit by scam or fraud and has to suspend or close operations.
Shareholders & Other Investors
A scam directly affects the bank’s shareholders. Stock prices of the scam or fraud hit bank come tumbling down on the stock exchanges. Once reports of a scam or fraud get into the news, shareholders rush to sell off their stocks. As a result, the once profitable stock begins losing value.
It also impacts investors in Exchange Traded Funds (ETFs) and Mutual Funds (MFs). That’s because an ETF or MF could have invested in stocks of the affected bank.
In fact, lots of ETFs and MFs in India invest part of their money taken from the public on buying Mutual funds and bank stocks because they’re profitable.
When stocks of a bank start spiraling downwards, the value of your ETF and MF investments will also nosedive. Even a highly adept Fund Manager handling an MF from a respectable Asset Management Company (AMC) can do little to prevent this downward slide.
Business Sector
The business sector is worst hit when a scam or fraud hit bank suspends or stops operations. Companies that hold accounts in the scam-hit bank are affected since they might be unable to operate their accounts for regular transactions.
Shareholders & Other Investors
A scam directly affects the bank’s shareholders. Stock prices of the scam or fraud hit bank come tumbling down on the stock exchanges. Once reports of a scam or fraud get into the news, shareholders rush to sell off their stocks. As a result, the once profitable stock begins losing value.
It also impacts investors in Exchange Traded Funds (ETFs) and Mutual Funds (MFs). That’s because an ETF or MF could have invested in stocks of the affected bank.
In fact, lots of ETFs and MFs in India invest part of their money taken from the public on buying Mutual funds and bank stocks because they’re profitable.
When stocks of a bank start spiraling downwards, the value of your ETF and MF investments will also nosedive. Even a highly adept Fund Manager handling an MF from a respectable Asset Management Company (AMC) can do little to prevent this downward slide.
Business Sector
The business sector is worst hit when a scam or fraud hit bank suspends or stops operations. Companies that hold accounts in the scam-hit bank are affected since they might be unable to operate their accounts for regular transactions.
