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PNB fraud: CBI files 1st chargesheet against Nirav Modi, former bank chief

15 May 2018

The central government's action against three top bankers in the country is a welcome move, said a top leader of All India Bank Employees' Association (AIBEA) on Tuesday.

Dinh La Thang was convicted earlier this year with 21 others of causing US$5.2 million (S$6.9 million) in losses to the state over an investment in a thermal power plant. The government holds a little over 62 per cent stake in PNB and close to 65 per cent in Allahabad Bank.

"PNB Board has chose to divest ED officers to replace them", Kumar added.

As CBI files its chargesheet in the $2 billion PNB fraud, the crackdown at senior executives Punjab National Bank (PNB) starts. "Agencies have filed chargesheets against bank management teams, there should not be any integrity issues in PSBs", Kumar said. The allegation against Ananthasubramanian is that she failed to comply with the Reserve Bank of India's (RBI) circulars issued on the Society for Worldwide Inter-bank Financial Telecommunications (SWIFT) control system in 2016.

Banking circles were shocked by the turn of affairs as they felt board members could hardly be linked to the fraud.

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Asked about the role of government nominee director, Kumar said, the government has decided that they are not part of lending or commercial decision.

CBI is all set to file its first chargesheet today Usha Ananthasubramaniam, the MD, and CEO of PNB will also be named in the chargesheet, according to sources.

Major arrests: Who all have been arrested in the PNB scam? . Gourishankar and K.R. Kamath were her predecessors at PNB, while Sunil Mehta succeeded her in the job. Besides the three board level officers, the CBI chargesheet, filed in a special court in Mumbai, names PNB's general manager (international operations) Nehal Ahad.

The CBI has detailed the roles of Nirav Modi, his brother Nishal Modi and Subhash Parab, an executive in Nirav Modi's company, an official closed to the development told PTI. Last week, Allahabad Bank reported a stand-alone net loss of almost Rs 3,510 crore for the last quarter ended March of 2017-18 due to more than three-time rise in its provisions for bad loans.

As on March 2017, its gross non-performing assets (NPAs) stood at Rs 55,370.45 crore, accounting for 12.5 percent of total loans. According to the chargesheet, the reconciliation of SWIFT system and Core Banking System, which enables inter-connectivity between branches and real-time updation of transactions, was not done despite reminders by the RBI. "They misinterpreted the directives", a CBI officer said.

PNB fraud: CBI files 1st chargesheet against Nirav Modi, former bank chief