Trouble mounts for Allahabad Bank CEO after CBI chargesheet in PNB scam

by Olga Hunt May 15, 2018, 22:26
Trouble mounts for Allahabad Bank CEO after CBI chargesheet in PNB scam

The agency filed the chargesheet before a special Central Bureau of Investigation (CBI) court here.

The PNB board too, has been asked to divest two executive directors of all powers, Financial Services Secretary Rajiv Kumar told reporters in New Delhi.

"The (PNB) board has chose 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.

Nirav Modi, of course, will be named 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. A source familiar with the matter said more people are likely to be charged later this week.

The officials said supplementary charge sheets will have information from foreign governments, shell companies, foreign banks, and detail the role of officials posted in foreign branches of Indian banks which issued credits to Modi's firms on the basis of PNB LoUs etc.

The agency has detailed the roles of Nirav Modi, his brother Nishal Modi and Subhash Parab, an executive in Nirav Modi's company, officials said.

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Two jewellers, Nirav Modi and Mehul Choksi linked fraud of over Rs 14,000 crore has reflected in the earnings of Punjab National Bank in a very disappointing manner.

The chargesheet deals with the first FIR registered in the case relating to the fraudulent issuance over Rs 6,000 crore of Letters of Undertaking to Diamond R US, Solar Exports and Stellar Diamonds.

The CBI had filed three FIRs between January and March to probe the PNB fraud. She was executive director at PNB from July 2011 to November 2013. The fraud was allegedly perpetrated despite the circulars issued by RBI, which was in the knowledge of senior officials of PNB.

As a result, provisions for the bad loans jumped four-fold to Rs 16,202.82 crore for the quarter under review compared to Rs 4,910.39 crore parked aside in the same period a year ago.

Senior officials of PNB did not implement the circulars and caution notices issued by Reserve Bank of India regarding safeguarding SWIFT operation through which messages were sent to overseas banks to issue loans to the companies of Nirav Modi, they said.

Earlier this month, PNB said it was targeting growth of over 10 percent in loans and deposits in 2018/19 and that it had strengthened the process of credit underwriting and upgraded its systems to prevent further frauds.


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