ABG Shipyard’s liquidation on as per NCLT process: SBI

“The lender’s forum diligently follows through with CBI in all such cases,” SBI said. ABG Shipyard has been accused of diversion of funds, misappropriation, and criminal breach of trust by the consortium of banks.

Also read: Biggest fraud: CBI books ABG Shipyard, ex-MD for cheating banks of ₹22,842 cr

The CBI has booked ABG Shipyard Ltd and its then Chairman and Managing Director Rishi Kamlesh Agarwal along with others for allegedly cheating a consortium of banks led by SBI of over ₹22,842 crore, news agency PTI reported on Thursday.

ABG Shipyard loan account became NPA in 2013

Talking about the chronology of the case, SBI said ABG Shipyard, which was incorporated on 15 March 1985, has been under banking arrangements since 2001. “Financed under consortium arrangement over a two dozen lenders. The leader in Consortium was ICICI Bank. Due to poor performance, the account became NPA on 30/11/2013. Several efforts were made to revive the company operations but could not succeed,” a statement from the biggest state-owned bank said.

The company’s loan account was restructured under the CDR mechanism in March 2014 by all lenders, said SBI, adding that the shipping industry was going through a downturn, one of the worst ever seen, and the operations of the company could not revive.

As per the SBI, after the restructuring failed, the ABG Shipyard’s account was classified as NPA (non-performing asset) in July 2016, with backdated effect from 30th Nov. 2013. E&Y was appointed as forensic auditor by lenders during April 2018 and they submitted their report on January 19. 

ICICI Bank was the lead banker: SBI

SBI has said that although ICICI Bank was the lead lender in the consortium and IDBI was the second lead, it was preferred that SBI being the largest PSB lender, lodges the complaint with CBI. “The first complaint was filed with CBI in Nov 2019. There was a continuous engagement between CBI and Banks and further information was getting exchanged,” it added. 

Company undergoing liquidation: SBI

SBI has said the circumstances of the fraud, as well as CBI requirements, were further deliberated in the various meetings of joint lenders and a fresh and comprehensive second complaint was filed in Dec. 2020. “The account is presently undergoing liquidation under an NCLT driven process,” it added.

How fraud is declared by banks:

A fraud is declared basis the Forensic Audit report findings that are discussed thoroughly in joint lenders meetings. Typically, when fraud is declared, an initial complaint is preferred with the CBI, and based on their enquiries further information is gathered. 

In a few cases, when substantial additional information is gathered, a second compliant incorporating full and complete details is filed which forms the basis for the FIR.