Suspecting the role of executives in the $2-billion fraud at Punjab National Bank (PNB) in the first chargesheet of Central Bureau of (CBI), the Government on Monday initiated action for removal of Allahabad Bank CEO Usha Ananthasubramanian and two other executive directors of the PNB. “The PNB board divested its two executive directors, KV Brahmaji Rao and Sanjiv Sharan, of all financial and executive powers,” Financial Services Secretary Rajiv Kumar said here.
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. However, sources said the Allahabad Bank board is likely to meet in a day or two.
As per the ownership in the bank is concerned, the Government holds a little over 62% stake in PNB and close to 65% in Allahabad Bank. Earlier in the day, the PNB board convened an emergency meeting on the insistence from 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 also on Monday filed its first chargesheet in the country's largest financial scam worth over $2 billion at PNB allegedly committed by billionaire jeweller Nirav Modi. The chargesheet 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 chargesheet. Around 10 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 of the fact that SWIFT and CBS integration was to take place based on the circular issued by RBI in 2016,” Kumar added.
Kumar said there is a set process for the removal and dismissal of directors from the board of a bank. “One notice was issued 10 days back. Section 8 of Banking Regulation Act define how do you remove the director. We have initiated action for that the removal also. So this is a clear message that we have to be responsible for what we do. We will only take action when we have substantive proof and not on hearsay,” he said.
When asked about action against two MDs named in the FIR related to loans given to Aircel by IDBI Bank, he said, “I would like to make it clear that you cannot take action only on hearsay. They are responsible person and it's only a few who are into this kind of thing otherwise by and large bankers have contributed to the economic growth of the country.”