Last Tuesday, Allahabad Bank’s managing director and chief executive officer Usha Ananthasubramanian found herself divested of all executive powers by the bank’s board after the CBI named her in the ₹12,800 crore Punjab National Bank-Nirav Modi fraud case.
What is the PNB link?
Ms. Ananthasubramanian had served at PNB in two stints: first as executive director between July 2011 and November 2013 and then from August 2015 to May 2017 as its CEO and MD. The fraud allegedly started in 2011. When the lid was blown off the scandal this February, Ms. Ananthasubramanian, as chairman of the Indian Banks’ Association, had taken a tough stand against PNB’s initial decision not to pay dues it owed other banks which had lent to Mr. Modi’s firms against letters of undertaking (LoUs) issued by PNB. She called a meeting of bankers and sought the Reserve Bank of India's intervention. PNB subsequently honoured its commitments.
Ms. Ananthasubramanian had faced tough times in PNB owing to an increase in bad loans — the bank reported a loss of ₹5,367 crore in the January-March period of 2015, a record quarterly loss for any Indian bank at the time. For the January-March quarter of 2017-18, the period when the LoU scam was detected and several months after Ms. Ananthasubramanian had left the bank, PNB posted a loss of ₹13,417 crore, again a record for any Indian bank in a quarter.
Ms. Ananthasubramanian's stint at PNB had ended earlier in May 2017 after the government, in a somewhat unprecedented move, decided to send some of the CEOs of large banks to smaller banks and moved her to the Kolkata-based Allahabad Bank.
Why has she been named?
In the chargesheet, the CBI has accused her of not taking any action despite being aware of the fraudulent transactions. The agency said Ms. Ananthasubramanian and two executive directors Bramhaji Rao and Sanjiv Sharan and general manager Nehal Ahad — all of whom were posted at a supervisory level in PNB in 2016-17 — through acts of omission facilitated the issuance of fraudulent LoUs.
The CBI also said Ms. Ananthasubramanian was aware of the fraud involving PNB, Dubai, and the Indian Overseas Bank, Chandigarh, and yet did not take any action. What has surprised her colleagues is the charge of act of omission that is made out against her. “She is charged with an act of omission and not an act of commission. It is not usual that a chargesheet is filed for acts of omission,” said a former colleague.
How did she gain prominence?
Ms. Ananthasubramanian was among the first set of candidates selected as MD & CEO by the NDA government, which decided to split the posts of chairman and managing director as part of a long overdue move to reform the boards of public sector banks. Before joining PNB, Ms. Ananthasubramanian was the first and only chief executive of the Bharatiya Mahila Bank that was set up by the Congress-led UPA government. The bank has since been merged with SBI.
Where was her first stint?
Ms. Ananthasubramanian joined Bank of Baroda as a Specialist Officer in February 1982. During a career spanning about 34 years, she worked in many key areas of banking and finance and was closely associated with the transformation project of Bank of Baroda. She holds a Master’s degree in Statistics from the University of Madras and a Master’s degree in Ancient Indian Culture from the University of Mumbai.
What’s in store?
Following the charge sheet, the Finance Ministry has started searching for a new CEO for Allahabad Bank. As for the 59-year-old Ms. Ananthasubramanian, the troubles with the law could well bring a premature end to her career.
