Nirav Modi scam: PNB, Allahabad Bank may decide on action against EDs, MD

Since charges are restricted to procedural lapses without any criminal intent, board will take a decision in that light

Punjab National Bank and Allahabad Bank may take a call on further action to be taken against two executive directors and the MD chargesheeted in the Rs 140 billion Nirav Modi fraud case, sources said.

Soon after Central Bureau of Investigation (CBI) filed chargesheet in May pointed involvement of top officials of banks, PNB's board decided to divest two executive directors of all powers.
 

According to the sources, PNB's Board is scheduled to meet tomorrow and decide about future course of action against its two executive directors K V Brahmaji Rao and Sanjiv Sharan.

The Allahabad Bank too would follow the suit, they said.

The CBI in its first chargesheet in the country's biggest financial by billionaire jeweller Nirav Modi also detailed the alleged role of the PNB's former chief Usha Ananthasubramanian, who is now Allahabad Bank CEO and MD.
 

The board of Allahabad Bank divested Ananthasubramanian from all her functional responsibilities after the first chargesheet in May itself.

Experts feel that since the charges are restricted to procedural lapses without any criminal intent, board will take a decision in that light.

It is also noted that PNB has claimed that it did not receive an important e-mail on preventing bank frauds, which was sent by the Reserve Bank of India (RBI).
 

The directive, issued on November 30, 2016, mandated all commercial banks in the country to strengthen their risk control mechanisms to ward off banking frauds, was not received by PNB, according to the internal report of the bank.

Nirav Modi and his uncle Mehul Choksi, in connivance with certain bank officials, allegedly cheated PNB of about Rs 140 billion through issuance of fraudulent Letters of Undertaking (LoUs).

A Mumbai branch of PNB had fraudulently issued LoUs for the group of companies belonging to Nirav Modi since March 2011.
 

The total number of LoUs issued to the companies of Nirav Modi, his relatives and the Nirav Modi Group are 1,213, and to Mehul Choksi, his relatives and the Gitanjali Group are 377.

With regard to the provision made for the loss incurred on account of Nirav Modi fraud, the bank provided Rs 71.78 billion, 50 per cent of the total amount of Rs 143.56 billion in the fourth quarter of 2017-18.

The remaining amount will be covered in the three quarters of the current finanyear.

PNB paid Rs 65.86 billion to other banks to discharge its liabilities towards Letters of Undertakings (LoUs) and Foreign Letters of Credit (FLCs) issued fraudulently and in unauthorised manner to certain overseas branches of Indian banks through the misuse of SWIFT system of the bank, which was then not integrated with CBS (Core Banking Solution).