NEW DELHI/MUMBAI (Reuters) - Indian police on Monday charged the former head of Punjab National Bank (PNB) (PNBK.NS) and 10 other officials at the state-run lender in the country’s largest-ever bank fraud case, two sources familiar with the matter told Reuters.
India’s Central Bureau of investigation (CBI) accused former PNB boss Usha Ananthasubramanian, currently the chief executive of Allahabad Bank (ALBK.NS), in the first batch of formal charges to be filed in the case, the two CBI sources said.
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.
Diamond jeweler Nirav Modi was also among those named in the list, two other sources said.
PNB, India’s second-largest state-run bank, disclosed in February that two jewelery groups had defrauded it by raising credit from overseas branches of other Indian banks using illegal guarantees issued by rogue PNB staff over several years.
PNB has been conducting a separate internal probe into the fraud and has already suspended over 20 officials.
The two PNB executives and Ananthasubramanian did not respond to multiple calls and messages seeking comment, while Allahabad Bank was not reachable for comment. Modi’s lawyer declined to comment saying he was yet to see the charge sheet.
Separately, India’s banking secretary Rajiv Kumar told media in New Delhi that a government nominee on the board of state-run Allahabad Bank would soon call a meeting to seek the removal of Ananthasubramanian.
The federal government owns controlling stakes in state-run lenders including Allahabad Bank and PNB.
PNB told Reuters on Monday it had relieved Rao and Sharan of their duties.
Indian authorities have arrested at least 20 people in the case and a court has issued non-bailable warrants against accused jewelers Nirav Modi and his uncle Mehul Choksi. The duo have denied the allegations against them, and authorities have said they both left the country before the fraud was uncovered.
Shares in Allahabad Bank closed 3.4 percent lower on Monday, while those in PNB ended slightly higher on the day.
Reporting by Promit Mukherjee, Rajendra Jadhav, Abhirup Roy and Suvashree Choudhury in Mumbai, Nigam Prusty, Aditya Kalra and Krishna Das in New Delhi; Writing by Sankalp Phartiyal; Editing by Euan Rocha and Mark Potter