PNB misrepresented facts to RBI, says CBI chargesheet

New Delhi, May 14 

Top honchos of PNB “misrepresented” the factual position on letters of understanding (LoUs) to the RBI and ignored its warnings when credit facilities worth over $2 billion were fraudulently cleared by its branch in Mumbai, according to the CBI, which filed its chargesheet in the Nirav Modi scam on Monday.

The agency said the then PNB MD and CEO Usha Ananthasubramanian and her top officials also failed to prevent the fraud despite having knowledge of the modus operandi, according to sources.

Diamond merchants Nirav Modi and his uncle Mehul Choksi allegedly cheated PNB by availing credits worth over $2 billion from overseas banks, on the basis of fraudulent LoUs issued by PNB staff, which were siphoned off by them.

Ananthasubramanian, who is currently the MD and CEO of Allahabad Bank, Executive Directors of PNB, KV Brahmaji Rao and Sanjiv Sharan, and General Manager (International Banking) Nehal Ahad are four senior bank executives who have been chargesheeted by the agency.

Giving details of the charges against Ananthasubramanian, the agency sources said she was the MD and CEO of PNB when a similar case of LoU fraud was reported from Indian Overseas Bank, Chandigarh, in 2016 where credits were issued by PNB’s Dubai branch on the basis of these guarantees.

The modus operandi in the IOB case was similar to the Nirav Modi case. Hence, the top brass of PNB had complete knowledge of the methods involved by fraudsters to cheat the banks using LoUs, the sources said.

After the IOB fraud had surfaced, the RBI had issued guidelines and circulars to prevent such frauds in the banks which were allegedly not implemented in PNB in its entirety, they said.

All these files were processed by Ananthasubramanian and three other top officers — Rao, Sharan and Ahad, which shows they were completely aware of the modus operandi of such frauds being perpetrated, they said.

The RBI had sent a questionnaire to the officials seeking to know the status of LoU issuing process in their bank which was responded to by Ahad in concurrence with his seniors, including Ananthasubramanian, in which he had stated that all was well in the bank, they said.

This was a clear “misrepresentation” of facts to the RBI by top officials of PNB, they said.

Meanwhile, the government on Monday said it has initiated action for removal of Allahabad Bank CEO Usha Ananthasubramanian and two executive directors of PNB following the CBI’s first chargesheet in the PNB fraud detailing their role. The PNB Board on Monday divested its two executive directors, KV Brahmaji Rao and Sanjiv Sharan, of all financial and executive powers, Financial Services Secretary Rajiv Kumar said.  — PTI