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Allahabad Bank to convene board meeting tomorrow

Press Trust of India  |  New Delhi 

will hold its board meeting tomorrow after the Finance Ministry's direction to take away all the powers of its MD and Usha Ananthasubramanian, who has been chargesheeted by the CBI in the USD 2 billion scam.

Ananthasubramanian was the MD and of the from 2015 to 2017 and was questioned recently by the CBI in connection with the scam, which was mainly perpetrated allegedly by diamond merchant

In a stock exchange filing today, Bank said it has convened a meeting of the Board of Directors on May 15 to discuss the matter, adding that it has not received any "formal communication" from the ministry.

Earlier at a media briefing, said the government has initiated action for removal of Bank and also two directors of the following the CBI's first chargesheet in in the scam.

Kumar also said the Allahabad Bank board has been asked to divest Ananthasubramanian of all powers and initiate further action.

The government holds a little over 65 per cent stake in Allahabad Bank and close to 62 per cent in the Punjab National Bank.

The CBI today filed its first chargesheet in the Punjab National Bank scam, the country's largest financial fraud so far.

The chargesheet detailed the alleged role of Ananthasubramanian in the scam.

and his associates used fake letter of undertaking (LoUs) to defraud Punjab National Bank of around USD 2 billion (nearly Rs 13,000 crore) in connivance with bank officials by exploiting the loophole of non-integration of SWIFT with the (Core Banking Solution).

"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.

Around 10 days ago, Kumar said the ministry had asked explanations from the two directors at the Punjab National Bank and from Ananthasubramanian.

"This was essentially because of the fact that SWIFT and integration was to take place based on the circular issued by RBI in 2016," Kumar said at the after the CBI filed the chargesheet.

SWIFT is a platform that integrates the entire financial messaging requirements

of banks and corporates for inter-country transactions.

In a separate stock exchange filing, Allahabad Bank said the Reserve Bank has imposed restrictions on its lending to risky assets and raising high-cost deposits in view of deteriorating financial health.

The directive has come within days of the RBI imposing similar restrictions on another Dena Bank, which is under the Prompt Corrective Action (PCA) of the central bank.

With regard to the bank's CRAR and leverage ratio position, the RBI has advised certain additional actions, the filing said.

Earlier in the day, the Punjab National Bank board convened an emergency meeting on the insistence from the government's

"The (Punjab National Bank) board has decided to divest (two) Directors 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.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, May 14 2018. 20:50 IST