NEW DELHI/MUMBAI (Reuters) - Indian police on Monday charged 22 people, including the former head of Punjab National Bank (PNB) (PNBK.NS) and three firms, in the country’s largest-ever bank fraud case.
India’s Central Bureau of Investigation (CBI) said the charge sheet was filed after an investigation into allegations of a fraud of about 65 billion rupees ($962 million) at PNB, which forms a part of a broader $2 billion fraud probe.
One source familiar with the matter said another charge sheet would likely be filed later this week naming more individuals in the ongoing probe.
The charges filed on Monday are the first formal ones to be filed in the sprawling case that has stunned investors, shaken the Indian banking sector and prompted a major regulatory crackdown.
PNB, India’s second-largest state-run bank, disclosed in February that two jewellery groups had defrauded it by raising credit from overseas branches of other Indian banks using illegal guarantees issued by rogue PNB staff over several years.
PNB has been conducting a separate internal probe into the fraud and has already suspended over 20 officials.
The CBI said it had charged 10 people tied to firms involved in the fraud. It also charged 11 officials from PNB, and its former head, according to its press statement that did not name any of the accused.
“During investigation, the CBI conducted searches at 42 premises and arrested fifteen persons. Around 80 witnesses have been examined and voluminous documents have been collected,” it said in a statement, adding further investigation was ongoing.
Earlier on Monday, two CBI sources told Reuters that one of the accused was former PNB boss Usha Ananthasubramanian, currently the chief executive of Allahabad Bank (ALBK.NS).
They said PNB executive directors K.V. Brahmaji Rao and Sanjiv Sharan were also named on the charge sheet filed in a Mumbai court, and the officials were accused of breaching central bank guidelines.
Diamond jeweller Nirav Modi, a central figure accused in the case, was among those named on the list as well, two other sources said.
Ananthasubramanian and the two PNB executives did not reply to multiple calls and messages seeking comment, while Allahabad Bank was not reachable for comment. Modi’s lawyer declined to comment saying he was yet to see the charge sheet.
Separately, India’s banking secretary Rajiv Kumar told media in New Delhi that a government nominee on the board of state-run Allahabad Bank would soon call a meeting to seek the removal of Ananthasubramanian.
The federal government owns controlling stakes in state-run lenders including Allahabad Bank and PNB.
PNB told Reuters on Monday it had relieved Rao and Sharan of their duties.
Indian authorities have arrested at least 20 people in the case and a court has issued non-bailable warrants against accused jewellers Nirav Modi and his uncle Mehul Choksi. The duo have denied the allegations against them, and authorities have said they both left the country before the fraud was uncovered.
Reporting by Promit Mukherjee, Rajendra Jadhav, Abhirup Roy and Suvashree Choudhury in Mumbai, Nigam Prusty, Aditya Kalra and Krishna Das in New Delhi; Writing by Sankalp Phartiyal; Editing by Euan Rocha and Mark Potter