Allahabad Bank board divests CEO of all functional powers

A day after the government initiated removal of Allahabad Bank Chief Executive Officer (CEO) Usha Ananthasubramanian following a CBI chargesheet in the Nirav Modi scam, the bank’s board on Tuesday divested her of all her functional responsibilities. It also requested the government to make suitable arrangements for smooth running of the bank.

On Monday, after similar government action against two executive directors of Punjab National Bank (PNB), K V Brahmaji Rao and Sanjiv Sharan, the PNB board, too, divested them of their financial and executive powers.

“The board of directors has decided that Usha Ananthasubramanian, managing director (MD) and CEO be divested of all functional responsibilities with immediate effect and the ministry of finance, department of financial services, be requested to make suitable arrangements for the bank,’ Allahabad Bank said in a regulatory filing to exchanges on Tuesday.

S Harisankar and N K Sahoo, executive directors of Allahabad Bank could not be reached for comments.

On Monday, the Reserve Bank of India (RBI) barred Allahabad Bank from high-risk lending and raising high-cost deposits. The RBI advised the bank to restrict expansion of risk-weighted assets and reduce exposure to un-rated and highrisk advances. The bank has been under prompt corrective action (PCA) by the RBI since January this year. The RBI has also restricted the bank from creation of non-banking assets and has advised it to restrict accessing or renewing wholesale or costly deposits or certificates of deposits.

Allahabad Bank had posted a net loss of ~35 billion for the quarter ended March 31, 2018, against a net profit of ~1.1 billion in the fourth quarter of the previous financial year.