Action against top bankers right, PNB MD should also keep away'

He also said the Reserve Bank of India (RBI), its nominees on the board of Punjab National Bank (PNB) cannot escape responsibility for the Letters of Understanding (LoU) scam. 

"The Central government's decision to keep away Ananthasubramanian, Managing Director and CEO of Allahabad Bank and the two Executive Directors in PNB from their banks is a welcome decision. It is good that the alleged wrongdoers are removed from the system," CH Venkatachalam, General Secretary, AIBEA said.

He said taking moral responsibility, the current Managing Director of PNB should also keep himself away from PNB till the probe into the alleged scam is over.

Ananthasubramanian earlier headed the PNB.

On Monday the Central Bureau of Investigation (CBI) filed its first chargesheet in the Rs 13,000 crore Nirav Modi scam in the Punjab National Bank (PNB).

"Similarly, the current Managing Director of PNB Sunil Mehta should also keep away from the bank on moral grounds till the probe into the alleged scam is over," Venkatachalam added.

He said the whole system at PNB has failed and the top management has to take responsibility given the magnitude of the fraud.

The CBI has chargesheeted Ananthasubramanian and 21 others, including 11 bank officials in connection with the fraud in PNB allegedly masterminded by diamantire Nirav Modi and his uncle Mehul Choksi.

Apart from Ananthasubramanian, the CBI has also charge sheeted two Executive Directors of PNB viz, KV Brahmaji Rao and Sanjiv Sharan and General Manager (International Operations) Nehal Ahad.

Venkatachalam does not agree with the view that RBI was misled by PNB officials on the possible misuse of LoU.

"The RBI has its nominees on the board of PNB. Further, RBI also inspects the bank branches. The RBI officials should also be brought under the net as they are culpable of serious negligence," Venkatachalam said.

He said the exposure of the banking sector to the gems and jewellery sector was huge and the RBI should have taken necessary action as the sector was not a priority sector.