Ex-PNB CEO Dismissed, RBI Allows CBI Probe Against Top Directors

RBI has given the CBI the right to prosecute former PNB MD Anathasubramanian.

Usha Ananthasubramanian, former MD and CEO of the Punjab National Bank.

(Photo Courtesy: Twitter)

The government dismissed former Managing Director of Punjab National Bank (PNB), Usha Ananthasubramanian, on 13 August. She was divested of her powers as Chief Executive Officer of Allahabad Bank three months ago, after the country's biggest bank fraud allegedly carried out by Nirav Modi and associates at PNB came to light.

She has been dismissed with immediate effect in the interest of Allahabad Bank, sources citing a government notification said.

Before moving to Allahabad Bank, Ananthasubramanian was named in the Central Bureau of Investigation (CBI) chargesheet in the Rs 14,000 crore fraud based on fake Letter of Understandings drafted in connivance with PNB employees.

It was claimed that she had failed to exercise control over PNB while serving as its MD, thereby enabling fraud through misuse of SWIFT at PNB's Brady House branch.

The Reserve Bank of India allowed the CBI to prosecute Ananthasubramanian in relation to the PNB fraud.

Top Directors to be Prosecuted

Besides Ananthasubramanian, the government has given sanction for prosecution against PNB executive director (ED) Sanjiv Sharan as part of the clean-up exercise in the system.

However, the government is yet to take any decision on PNB executive director KV Brahmaji Rao, whose name also figured in the CBI chargesheet.

While the RBI has given prosecution sanction against Anathasubramanian and Sharan. It has asked the government to prosecute former executive director Ram S Sangapure.

The Modi-PNB Case

Ananthasubramanian headed PNB between August 2015 and May 2017, before moving to Allahabad Bank. She was executive director at PNB from July 2011 to November 2013.

Modi and his uncle Mehul Choksi, in connivance with certain bank officials, allegedly cheated PNB of about Rs 14,000 crore through issuance of fraudulent letters of undertaking. A Mumbai branch of PNB had fraudulently issued LoUs for the group of companies belonging to Modi since March 2011.

The total number of LoUs issued to the companies of Nirav Modi, his relatives and the Nirav Modi Group are 1,213, and to Mehul Choksi, his relatives and the Gitanjali Group are 377.

With regards to provision made for the loss incurred on account of the Nirav Modi fraud, the bank provided Rs 7,178 crore, 50 percent of the total amount of Rs 14,356 crore in the fourth quarter of the last financial year. The remaining amount will be covered in the three quarters of the ongoing financial year.

PNB paid Rs 6,586.11 crore to other banks to discharge its liabilities towards LoUs and foreign letters of credit issued fraudulently and in an unauthorised manner to certain overseas branches of Indian banks through the misuse of SWIFT system of the bank, which was then not integrated with core banking solution.