Finally, heads are beginning to roll in India's biggest bank fraud case

CBI names AllBank CEO Usha in PNB fraud case
PNB fraud case: Nirav Modi, bank's ex-chief named in CBI's first chargesheet

15 May, 2018

Moneycontrol had reported that soon after the Central Bureau of Investigation (CBI) filed a chargesheet against current and former officials of Punjab National Bank (PNB) and Allahabad Bank, the Finance Ministry has directed both the banks" boards to "divest' these officials of their powers.

"Allahabad Bank will call a board meeting and then decide to divest the power of Chief Managing Director (Usha) named in CBI chargesheet", said Rajiv Kumar, Secretary, Department of Financial Services (DFS).

According to a press release issued by CBI, "Investigations revealed that during the 2011 to 2017, the accused PNB officials, in conspiracy with owners of the firms and others, had fraudulently issued a large number of LoU's to overseas banks for obtaining buyer's credits in favour of the three named firms without any sanctioned limit or cash margin and without making entries in the CBS systems of the bank".

Ananthasubramanian, who is now the MD and CEO of Allahabad Bank, Executive Directors of Punjab National Bank K V Brahmaji Rao and Sanjiv Sharan, and General Manager (International Banking) Nehal Ahad are four senior bank executives who have been charge-sheeted by the agency.

The names of two serving and one former senior official of PNB, along with several others, will reportedly feature in the chargesheet.

At the heart of the PNB fraud was the Society for Worldwide Interbank Financial Telecommunications (SWIFT) messaging system, which is used by banks worldwide to enable cross-border transactions.

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

The chargesheet primarily deals with the first FIR registered in the case relating to the fraudulent issuance over Rs 6,498.20 crore worth of LoUs to Diamond R US, Solar Exports and Stellar Diamonds. Hence, the top brass of PNB had complete knowledge of the methods involved by fraudsters to cheat the banks using LoUs, the sources said.

In connection with the pleas filed on the Gitanjali Gems in the court, the ED said, "The Company cleverly veils any reference to Mehul Choksi, who left India in the twilight of the scam coming to the notice of the law enforcement agencies".

The chargesheet is based on the first FIR the agency registered on January 31 against Modi, his wife Ami, brother Nishal and uncle Choksi along with some others following January 29 complaint to it by the Deputy General Manager of the PNB's Zonal office in Mumbai.

PNB was hit by a almost Rs13,000 crore scam allegedly perpetuated by jewellers Nirav Modi and Mehul Choksi in connivance with some bank employees. Total income came in at ₹12,946 crore, against ₹14,989 crore in the same quarter previous year. PNB share price has fallen 47.6 percent so far this year. Since the bank's SWIFT, an global messaging system, was not integrated with its core banking system, the fraud went undetected for seven years.

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