India's Central Bureau of Investigation and the Reserve Bank of India will prosecute and initiate criminal charges against former executives of Punjab National Bank in connection with a US$2 billion loan fraud, Mint reported Aug. 13.
The CBI and the central bank were given the go-ahead from the government to initiate criminal charges against Usha Ananthasubramanian, Punjab National Bank's former CEO and managing director, and Sanjiv Sharan and Ram Sangapure, former executive directors at the bank.
The central bank will file a case against them under the Banking Regulation Act and was given sanction to prosecute them, according to a finance ministry official. A case is still being considered for a third executive director, K.V. Brahmaji Rao, the official said, adding that the central bank has not sought permission to file charges against Rao.
A CBI charge sheet alleged that Ananthasubramanian and some other senior bank officials were aware of the loan scam but did not take corrective measures. The fraud centered around letters of undertaking, which allow bank customers to raise money from an overseas branch of another bank. Punjab National Bank officials at a Mumbai branch allegedly sent requests for letters of undertaking to other banks without the necessary approvals on behalf of high-profile jeweler Nirav Modi and his associates.
Ananthasubramanian and Sharan did not respond to the publication's request for comment. Sangapure said he was not aware of the development.