Two top officials of Punjab National Bank were removed from its board after the Central Bureau of Investigation (CBI) found their involvement in the Rs 140 billion fraud related to group of companies belonging to Nirav Modi and Mehul Choksi.
PNB executive directors Rajiv Sharan and KV Brahmaji Rao were removed, based on the directions of the government.
Allahabad Bank managing director and chief executive officer Usha Ananthasubramanian, who has also been named in the chargesheet filed by the CBI in a Mumbai court today, will also likely step down. Ananthasubramanian was the MD and CEO of PNB between August 2015 and May 2017.
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The action comes after the government asked the board of the two banks to remove these executives, based on the CBI’s chargesheet in the case.
PNB held a board meeting on Monday and decided to remove the two executive directors, requesting the government to replace them, finance ministry’s department of financial services secretary Rajiv Kumar said in a press conference here. He added that ministry has directed the Allahabad Bank to hold an emergency meeting to take action against Ananthasubramanian.
“For removal and disciplinary action, there is a set procedure, under Section 8 of the Nationalised Bank Schemes 1970. A show-cause notice to the bank executives was issued around 10 days back when we found out through initial assessment that there is some lapses. Today, after it was confirmed that there is a substantiative problem, we initiated the action immediately,” Kumar said.
In January, PNB had reported Rs 140-billion fraud related to letters of undertaking facility – a loan instrument that was used by trade companies – availed “fraudulently” by group of companies belonging to Nirav Modi and Mehul Choksi, who own and run their jewellery firms. The fraud has been going on since 2011, PNB has said.
“This is a clear message that we have to be responsible for what we do. We will only take action when there is a substantial proof,” Kumar said.
Asked why no action was taken against other chief executives of PNB, including the incumbent, Kumar said, “We will not take any action on hearsay or rumours…Three board-level executives were found to be involved and we have initiated action. The moment I have definite information either from the regulator (Reserve Bank of India) or the investigators, government will not hesitate in taking actions.”
The process of appointing vacancies in the boards of public sector banks has been initiated as the government has written to the Banks Board Bureau to convene a meeting soon for recommending replacements.
PNB executive directors Rajiv Sharan and KV Brahmaji Rao were removed, based on the directions of the government.
Allahabad Bank managing director and chief executive officer Usha Ananthasubramanian, who has also been named in the chargesheet filed by the CBI in a Mumbai court today, will also likely step down. Ananthasubramanian was the MD and CEO of PNB between August 2015 and May 2017.
–– ADVERTISEMENT ––
The action comes after the government asked the board of the two banks to remove these executives, based on the CBI’s chargesheet in the case.
PNB held a board meeting on Monday and decided to remove the two executive directors, requesting the government to replace them, finance ministry’s department of financial services secretary Rajiv Kumar said in a press conference here. He added that ministry has directed the Allahabad Bank to hold an emergency meeting to take action against Ananthasubramanian.
“For removal and disciplinary action, there is a set procedure, under Section 8 of the Nationalised Bank Schemes 1970. A show-cause notice to the bank executives was issued around 10 days back when we found out through initial assessment that there is some lapses. Today, after it was confirmed that there is a substantiative problem, we initiated the action immediately,” Kumar said.
In January, PNB had reported Rs 140-billion fraud related to letters of undertaking facility – a loan instrument that was used by trade companies – availed “fraudulently” by group of companies belonging to Nirav Modi and Mehul Choksi, who own and run their jewellery firms. The fraud has been going on since 2011, PNB has said.
“This is a clear message that we have to be responsible for what we do. We will only take action when there is a substantial proof,” Kumar said.
Asked why no action was taken against other chief executives of PNB, including the incumbent, Kumar said, “We will not take any action on hearsay or rumours…Three board-level executives were found to be involved and we have initiated action. The moment I have definite information either from the regulator (Reserve Bank of India) or the investigators, government will not hesitate in taking actions.”
The process of appointing vacancies in the boards of public sector banks has been initiated as the government has written to the Banks Board Bureau to convene a meeting soon for recommending replacements.
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