PNB Scam: FinMin cracks down on people in CBI chargesheet
Following the filing of the CBI chargesheet today in the PNB scam, the board of the Allahabad Bank was asked to remove Usha Ananthasubramanian as its CEO and MD by Financial Services Secretary, Rajiv Kumar. PNB has also been asked to divest three officials - executive directors Brahmaji Rao, Sanjiv Sharan, and general manager (international operations) Nehal Ahad - of all powers. Here's more.
Rajiv Kumar: Boards will now have to take a decision
"Today, we have directed directors of PNB and Allahabad bank to divest all the powers of those who are accused. We have issued a formal letter to our directors in the board and...the boards will take an appropriate decision," said Rajiv Kumar.
Usha, other PNB officials named for lapses in SWIFT system
Usha Ananthasubramanian served as the CEO and MD of PNB from 2015 to 2017. According to India Today, Usha reportedly did not comply with a 2016 RBI circular on the SWIFT (Society for Worldwide Inter-bank Financial Telecommunications) system. The aforementioned PNB officials were also named for lapses in their handling of the SWIFT system.
What is the SWIFT system?
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) provides a network to financial institutions worldwide, allowing them to send and receive information about financial transactions in a secure, standardized, and reliable environment. A majority of international interbank messages uses the SWIFT network.
Lapses in handling the SWIFT system facilitated the PNB scam
Some of PNB's employees at its Brady House branch in Mumbai, in connivance with representatives from Nirav Modi's companies, had issued fraudulent letters of undertaking (LoUs) using the bank's SWIFT network. Using these fraudulent LoUs, Modi's companies were able to avail buyer's credit from foreign lenders, as well as foreign branches of Indian banks. However, PNB didn't have records of these LoUs.