The credibility of Indian corporate governance was dealt another blow today when Wipro, the country's third-largest outsourcing company, admitted that it had been blacklisted from bidding for contracts by the World Bank.

The disclosure comes less than a week after B. Ramalinga Raju, the founder and former chairman of Satyam, India's fourth-largest outsourcer, confessed to orchestrating a £1 billion fraud over several years by inflating the company's profits and assets.

The Satyam scandal, India's biggest corporate fraud, has rocked global confidence in India's corporate governance regimes.

Mr Raju and his brother, Rama Raju, have been charged with criminal conspiracy and forgery and are being held in prison in the southern city of Hyderabad along with Vadlamani Srinivas, Satyam's chief financial officer.

Shares in Wipro, which employs more than 95,000 people, fell more than 12 per cent after the World Bank said that the group had been banned from working with the institution for "providing improper benefits to bank staff".

Wipro said that the allegation related to a scheme that had allowed the company's clients to buy American depository receipts (ADRs) in the outsourcer when it listed in New York in 2000.

Wipro said in a statement that it had offered the banks' staff the opportunity to buy its ADRs "to expand our recognition and brand" and that all participants in the program had signed a statement pledging that their purchases did not "violate any ethics or conflict of interest policies of their company".

The sanction was imposed in June 2007 and will run until 2011.

The World Bank said on Sunday that it had decided to make public the names of all companies that have been barred from receiving direct contracts from the anti-poverty organisation under its corporate procurement program.

It said: "This change was made in the interest of fairness and transparency". It named three companies – Wipro, Satyam and Megasoft Consultants - all of them Indian.

World Bank staff bought shares worth a total of $72,000 at Wipro's initial public offering price, it said.

Wipro said that its revenue from the World Bank was "insignificant" and that the ban "won't adversely affect our business and results of operations".

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