The government today said it has initiated action for removal of Allahabad Bank CEO Usha Ananthasubramanian and two executive directors of Punjab National Bank following the CBI's first chargesheet in the USD 2 billion fraud at PNB detailing their role.
Kumar said there is a set process for removal and dismissal of directors from the board of banks and that has been initiated.
Sources said the Allahabad Bank board is likely to meet in a day or two.
The government holds a little over 62 per cent stake in PNB and close to 65 per cent 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 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 said.
Jeweller Nirav Modi used fake letter of undertaking (LoUs) to defraud PNB of over Rs 13,000 crore in connivance with bank officials by exploiting the loophole of non-integration of SWIFT with the Core Banking System.
"This was the duty of the senior management to minimise the risk in the system. We issued notices and sought explantation 10 days back from top officials of these banks," he said.
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 (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.
The government, he said, has taken a strict action which reflects its resolve to ensure the highest corporate governance in state-owned banks.
The department will not spare anyone involved in corruption and lapses, irrespective of his or her position and will take speedy action against them while honest officers have nothing to fear about, he said, adding the government would solidly stand behind honest officers.
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 its only a few who are into this kind of thing otherwise by and large bankers have contributed to the economic growth of the country."
The problem is generally in the large corporate side, while branches across the country by and large are corruption free, he said.
Last month, the Central Bureau of Investigation (CBI) booked Syndicate Bank MD and CEO Melwyn Rego, who was Deputy Managing Director of IDBI, along with several others in the Rs 600 crore IDBI loan default case.
The CBI has also booked former IDBI CMD Kishor Kharat, at present MD and CEO of Indian Bank, in the loan fraud case.
Expressing faith in the banking system, Kumar said banks have a strong, robust tradition and they follow highest standard of corporate governance barring few stray cases.
"The moment I have definitive information either from the regulation side, supervision side or investigation side, the government will not hesitate in taking action to protect people's trust in the banking system," he said.
Citing various steps taken in the last few years to cleanse banking system, Kumar said the process for appointment of director have been changed since 2015 giving importance to merit and integrity.
Besides, the government has initiated whole lot of reform including improvement in asset quality, shoring up capital etc.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)