Govt steps in to remove Allahabad Bank CEO and two PNB directors

NEW DELHI: The government on Monday said it had initiated action for removal of Allahabad Bank CEO Usha Ananthasubramanian and two executive directors of Punjab National Bank following the CBI'S first charge sheet in the USD 2 billion fraud at PNB detailing their role.

The PNB board on Monday divested its two executive directors, K V Brahmaji Rao and Sanjiv Sharan, of all financial and executive powers, Financial Services Secretary Rajiv Kumar said.

Similar action is likely to be taken by the board of Allahabad Bank against its CEO and MD Ananthasubramanian, who was the managing director of PNB till May 5 last year.

The secretary said the Allahabad Bank board has also been asked to divest Ananthasubramanian of all powers and initiate further action. Kumar said there is a set process for removal and dismissal of directors from the board of banks and that has been initiated.

Sources said the Allahabad Bank board is likely to meet in a day or two.

The government holds a little over 62 percent stake in PNB and close to 65 percent in Allahabad Bank.

Earlier in the day, the PNB board convened an emergency meeting on the insistence of the government's nominee director.

"The (PNB) board has decided to divest EDS of the functional and financial responsibilities and have also requested the government to replace them," Kumar said, adding the government is committed to taking strict action against erring officials.

The CBI on Monday filed its first charge sheet in the country's largest financial scam worth over USD 2 billion at PNB allegedly committed by billionaire jeweller Nirav Modi.

The charge sheet detailed the alleged role of PNB'S former chief Ananthasubramanian in the scam. Ananthasubramanian was the MD and CEO of PNB from 2015 to 2017 and was questioned recently by the CBI in connection with the case.

"Today agencies have filed the charge sheet. Around ten days ago we had asked explanations from the two executive directors at the PNB and the current MD and CEO in Allahabad Bank. This was essentially because SWIFT and CBS integration was to take place based on the circular issued by RBI in 2016," Kumar said.

Jeweller Nirav Modi used a fake letter of undertaking (Lous) to defraud PNB of over Rs 13,000 crore in connivance with bank officials by exploiting the loophole of non-integration of SWIFT with the Core Banking System.