The board of state-run Allahabad Bank on Tuesday took away all the powers of its managing director and chief executive Usha Ananthasubramanian following a directive from the finance ministry in connection with the $2-billion fraud at Punjab National Bank, which she headed for about 21 months through May 2017.
Shares of Allahabad Bank tanked 8.6 per cent on the BSE on Tuesday (even though the Sensex remained flat), extending a 3.2 per cent drop on Monday when the government cracked the whip. With this move, three top bankers at two banks — including PNB executive directors KV Brahmaji Rao and Sanjiv Sharan — have been shown the door since Monday after the Central Bureau of Investigation (CBI) filed the first chargesheet on the biggest fraud in the country’s banking history, involving jeweller Nirav Modi. The government acted swiftly after the CBI action, asking the boards of the two public-sector banks to divest their top officials of powers.
The bankers were charged under Section 409 of the Indian Penal Code (IPC) for criminal breach of trust and Section 420 of the IPC for cheating and Section 13(2) of the Prevention of Corruption Act for causing wrongful losses to the bank and criminal breach of trust to the public. The chargesheet was filed against 25 entities, including 22 individuals and three firms. Allahabad Bank said in a filing with stock exchanges: “…the Board of directors of the bank…has decided that Usha Ananthasubramanian, MD & CEO, be divested of all functional responsibilities…” (FE)