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'Divest powers of accused,' Finance Ministry directs PNB, Allahabad bank

'Divest powers of accused,' Finance Ministry directs PNB, Allahabad bank

It also named PNB executive directors K V Brahmaji Rao and Sanjiv Sharan, among others, in a charge sheet filed in a Mumbai court, the sources said, adding the officials were accused of breaching central bank guidelines.

As per the ownership in the bank is concerned, the Government holds a little over 62% stake in PNB and close to 65% in Allahabad Bank. The Allahabad Bank board has been asked to divest Ananthasubramanian of all powers and initiate further action. Kumar said there is a set process for removal and dismissal of directors from the board of banks and that has been initiated.

Rajiv Kumar, Secretary, Dept Financial Services (DFS) told media-persons, "PNB board meeting is underway, they will announce the action taken after the meeting". "The next chargesheet will concentrate on Mehul Choksi and his companies". All government directors and nominees have been asked to attend bank board meetings and all ED and MD-level vacancies have been forwarded to the Banks Board Bureau. Usha Ananthasubramaniam, who was the MD and the CEO of the PNB bank is also expected to be included in the charge sheet. Interestingly, the PNB scam extended from 2011 till 2018. The brothers as well as their uncle Mehul Choksi had fled India after the scam was discovered. Last week, Allahabad Bank reported a stand-alone net loss of almost Rs 3,510 crore for the last quarter ended March of 2017-18 due to more than three-time rise in its provisions for bad loans.

The Delhi-based lender's earnings will be under pressure as it will have to make provisions for the scam-related payouts to other banks.

An analyst with a private brokerage firm who did not wish to be identified said the loss reported may vary depending on the decision of the bank management on whether to spread the impact of the bond losses and gratuity expenses across quarters or provide for the same in entirety in the March quarter. "Bankers have become jittery", said Amit Bannerjee, an independent merchant banker working for East Asian Funds. After several months of negative credit growth previous year, bank credit had picked up from November.

On Monday, Reserve Bank imposed restrictions on Allahabad Bank's lending to risky assets and raising high-cost deposits in view of deteriorating financial health.

The agency also made it clear that the naming of Ananthasubramanian in the charge sheet does not mean that her predecessors have been given clean chit as the investigation is going on, they said.

Nirav Modi, of course, will be named in the chargesheet.

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