Why bank stocks fall in indian market? Is it justified?

Taken from www.shvoong.com ( good site of me):
In India, today i.e. 24.11.2010 around 2 pm, CBI arrested totally 8 persons , some from banks and LIC housing finance and some from Finance consultancy services in Mumbai. The media , without knowing the basic things, raised hue and cry that banking system is having some loopholes for bad debts etc. Indian stock market lost nearly 200 points on hearing this and casualty is bank stocks. But slowly as further news pour in, it appears that indian banking system is intact sound under the watchful eyes of Reserve bank of India ;only certain vested individuals in banks took some bribe money to process loans quickly taking the help of financial consultant companies as middle men. as usual the financial conultant companies takes a cut of 1% to 2% as their fees.Though some real estate companies name appeared in cbi report, it is only as references and not accused. No company employees are arrested by cbi and only details like sanction date of loans etc. were asked by cbi. so it appears to be isolated instance of corruption by officials of public sector banks. Since there are so many layers in verifying and sanctioning loans, there is little chance of any loan without proper security. ofcourse there may be few loans with insufficient security when top echleon interferes with procedure and it may be limited one for political or personal reasons but cases may be limited.

Thus it appears from the news report that
1.Only few individuals who are dishonest have taken bribe for arranging the loans at the earliest.They include some middle and top level managers . Use of brokers for arranging loans is done by companies in order to get the loans quickly. It is just like brokers in RTO office, Govt offices etc. as companies and individuals do not have time to waste their time and energy at the doors of babus. Since IT is not developed wantonly in these sectors to make officers to fear about delay and for answering delay, these things are happening in India. It is a routine one and it is a known fact and supreme court has already spoken sadly about this quoting that this can also be made as regular cost.
2. In LIC housing finance, leakage of information may have been done to some middlemen who may use it in stock market for purchase and sale of shares. Now lot of consultants are there to advise clients when to purchase or sell shares based on some inside information. May be this is the cause for that to get information. If LIC/LIC housing finance wants to purchase certain shares, these information may leak earlier to certain individuals so that some may corner those shares earlier in order to get benefit. This may be reason for giving money to obtain inside information.So it is only personalised matters and there may not be any problem with the loans and assets quality hypothecated with the banks. There may be some 1 or 2% of stray cases of insufficient assets for which banks already provide bad debt provision.