On the day she was to retire, Usha Ananthasubramanian, former chief executive and managing director (MD)of Punjab National Bank (PNB), was dismissed from service in connection with the $2.2-billion fraud at the state-run lender.

Ananthasubramanian, who was shifted to Allahabad Bank as its MD last year, was at the helm of affairs at PNB for about 21 months through May 2017. She had also served as the executive director (ED) of the second-largest public-sector lender from July 2011 to November 2013.

Her dismissal could set a precedent and signals the government could take such tough calls against other senior public-sector banks already booked by investigative agencies once they are either convicted of fraud or have had incriminating evidence against them to suggest their complicity.

In May, Ananthasubramanian, along with two PNB EDs, KV Brahmaji Rao and Sanjiv Sharan, were divested of power by their respective boards on a directive by the finance ministry, after the Central Bureau of Investigation (CBI) named them in its first charge sheet on the biggest fraud in the country’s banking history, involving jewellers Nirav Modi and Mehul Choksi. However, she continued to be an employee of Allahabad Bank.

A source said the dismissal from service would pave the way for the CBI to initiate prosecution of Ananthasubramanian in relation to the PNB case. It’s not immediately clear if Sharan and Rao have also been dismissed. Another source said a decision to dismiss Sharan has been taken and the fate of Rao will be decided soon.

The bankers were charged under Section 409 of the Indian Penal Code for criminal breach of trust and Section 420 of the IPC for cheating and Section 13(2) of the Prevention of Corruption Act for causing wrongful losses to the bank and criminal breach of trust to the public.

The CBI’s initial charge sheet was filed against 25 entities, including 22 individuals and three firms.

The dismissal comes at a time when dozens of cases have already been filed against senior executives of some public-sector banks.

From Modi and Choksi to Vikram Kothari, promoters of dozens of companies have been accused of defrauding the banks, raising suspicion about possible collusion of some bankers in the frauds.

Former IDBI Bank chief Kishor Kharat — who is currently the MD and chief executive officer of Indian Bank — and present Syndicate Bank MD and CEO Melwyn Rego — who was earlier the deputy MD of IDBI Bank — were booked by the CBI in April over a controversial loan provided to companies of former Aircel promoter C Sivasankaran that has turned a non-performing asset. Their fate also hangs in balance. In June, the Bank of Maharashtra board resolved to remove arrested CEO and MD Ravindra P Marathe from all functional responsibilities.

The divestment of Ananthasubramanian’s power had stoked fresh uncertainties at Allahabad Bank — which was already placed under the prompt corrective action (PCA) framework and asked by the central bank to curb lending until it fixed its finances. Now, her dismissal also means the Indian Banks’ Association will have to find a new chief as Ananthasubramanian earlier this year became the first woman to head the association in its 71-year-long history.

Some analysts feel her dismissal could weigh on decision-making at public-sector banks, albeit temporarily. However, to allay fears of honest bankers who could avoid taking tough business calls fearing action in future, financial services secretary Rajiv Kumar has already said action won’t be initiated on just hearsay. As such, the recent passage of the Prevention of Corruption (Amendment) Bill, 2013, has drastically reduced the scope of unfair investigation or arrest of public servants, including bankers, for genuine error of judgement in policymaking and will thus enable them to take bold commercial decisions, said a senior finance ministry official. He also added that the government doesn’t intend to interfere in the commercial decisions of public-sector banks, but it seeks highest standards of corporate governance at these lenders.

Separately, in a late-evening statement, PNB said on Monday that it is “taking all required steps to check any kind of gap, loopholes and deviations in system and procedures”. “The bank…is committed to implementing ethical standards besides tightening the norms wherever required despite demonstration carried out by officers’ associations/unions at some centres,” it added.

PNB revealed in February that firms of Modi and Choksi had defrauded it by raising credit from overseas branches of other Indian banks using illegal guarantees issued by a few tainted PNB staff since 2011-12. The bank has already suspended over 20 officials.