Gujarat-based ABG Shipyard, which was once known as a powerhouse in shipbuilding, has now found itself behind India’s ‘biggest bank fraud’. The Central Bureau of Investigation, acting on a complaint filed by State Bank of India (SBI) on August 25, 2020, registered an FIR in the loan scam case on February 7, 2022.
The central probe agency booked ABG Shipyard, its directors, and ABG International Pvt Limited for allegedly causing losses of Rs 22,842 crore to a consortium of 28 banks including SBI, ICICI Bank and IDBI Bank.
What is the loan fraud about?
ABG Shipyard Ltd, the flagship company of the ABG Group, incorporated in the year 1985, is accused of defrauding 28 banks (the consortium is led by SBI) to the tune of 23,000 crore (Rs 22,842 to be precise).
According to CBI’s statement in the case, the shipbuilding firm availed loans since 2005, but the account turned NPA in 2013, owing to non-payment of dues. The company fell prey to the global financial crisis of 2008, leading to it becoming a non-performing asset.
Meanwhile, it also came to light that the firm diverted funds to other related companies and loans were allegedly used for investments through overseas subsidiaries.
In March 2014, SBI tried to re-structure loans to ABG Shipyard under corporate debt restructuring, which eventually failed. Two years later in July 2016, the ABG account was declared an NPA, with back-dating to 30 November, 2013.
In January 2019, public lender SBI identified a fraud and filed a complaint in November in the same year. Although the lead lender in the consortium of banks was ICICI Bank, the complaint was raised by SBI being the largest PSB lender.
The CBI registered a case on February 7, 2022 and on February 15, 2022, it issued lookout notices against promoter Rishi Agarwal, and ABG executives Santhanam Muthuswamy and Ashwini Kumar.
How much ABG Shipyard owes to banks?
According to SBI’s complaint, the company owes Rs 2,925 crore to the bank, Rs 7,089 crore to ICICI Bank, Rs 3,634 crore to IDBI Bank, Rs 1,614 crore to Bank of Baroda, Rs 1,244 to Punjab National Bank and Rs 1,228 crore to Indian Overseas Bank.
