Government sacks two PNB executives for alleged lapses in $2 billion fraud



One year ago the country’s biggest bank scam took place.

Shares of the 124-year-old state-run Punjab National Bank (PNB) lost more than half their value since the $2 billion fraud came to light. In just first two days, PNB lost Rs 8000 cr of market value.

A political storm brewed over India’s biggest bank fraud. The Punjab National Bank had said billionaire diamantaire Nirav Modi has made “vague” offers to repay some of the $1.77 billion he and companies linked to him obtained in loans abroad using fraudulently acquired guarantees of the state-owned lender.

The CBI had accused two executive directors – K. Veera Brahmaji Rao and Sanjiv Sharan – of the bank of breaching the Reserve Bank of India (RBI) guidelines.

Today, the government has sacked the two senior executives of the bank for allegedly failing to prevent the fraud.

The firing of the two senior executives is the first instance of sacking of the bank’s employees since it said that billionaire diamond jeweler Nirav Modi and his uncle had for years fraudulently raised billions of dollars in foreign credit by conspiring with staff at the bank.

Modi and his uncle Mehul Choksi, who left India before the fraud was discovered, have denied the accusations.

In a stock exchange filing late on Friday, the country’s second-biggest state bank said the government had removed two senior executives from the office of executive director with immediate effect. The filing did not give a reason.

The government then fired them because “they failed to use global payments network SWIFT to detect the fraud”, the sources said, declining to be identified because the reasons for the sacking have not been made public.

“They were not able to supervise and there was dereliction of duty on their part,” said one of the sources, a government official.