CBI files 1st charge sheet against Nirav Modi


It said top honchos of Punjab National Bank (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. The government holds a little over 62 per cent stake in PNB and close to 65 per cent in Allahabad Bank.

The CBI later registered two more FIRs in connection with the case.

The names of two serving and one former senior official of PNB, along with several others, will reportedly feature in the chargesheet.

In its 7500-page charge sheet, the CBI had accused 25 people, including Usha Ananthasubramanian, the chief executive officer (CEO) and managing director of PNB when the fraud was perpetrated.

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"Allahabad Bank will call a board meeting and then decide to divest the power of Chief Managing Director (CMD) named in CBI charge sheet", he added.

PNB was allegedly defrauded by some of its branch level employees who in connivance with Nirav Modi had issued letters of undertaking without following the bank's prescribed procedures since 2011 which ballooned into a big scam.

"After including outstanding amounts under other credit facilities to the above entities, the amount involved now works out to be Rs 14,356.84 crore", PNB said. The scam pertains to the alleged issuance of fraudulent Letters of Undertakings of more than Dollars 2 billion to companies of Modi and his uncle Mehul Choksi by the Punjab National Bank's Brady House branch in Mumbai during 2011-17, officials said. "Reconciliation of SWIFT (Society for Worldwide Inter-Bank Financial Telecommunication) messaging system CBS was not done despite repeated caution notices of the RBI", a CBI official said. Kumar said there is a set process for removal and dismissal of directors from the board of banks and that has been initiated. "They misinterpreted the directives", a CBI officer said. She is now serving as the CEO and MD of the Allahabad Bank. Moreover, these were not accounted in the bank's core banking system. Out of this, the bank paid Rs 6,500 crore to seven banks honouring these LoUs in the March quarter, which is likely to be seen in its quarterly results. The CBI has registered three separate FIRs in connection with the alleged fraud in the public sector bank by the companies of Modi and Choksi who have since fled the country.

"It was practised that government directors or nominees are not part of commercial decisions, so they are not part of the committee which sanctions the loan. further we have issued a circular saying that nobody would interfere anywhere in commercial decision", he said.