Wednesday, Feb 01, 2023

No effort to delay ABG Shipyard case: SBI

Account has been declared a fraud involving Rs 22,842 crore; first complaint with CBI filed in November 2019, second in December 2020, says bank

State Bank of India, ABG Shipyard Ltd, NCLT, ICICI Bank, IDBI Bank, fraudulent account, ABG Shipyard account freeze, Business news, Indian express business news, Indian express, Indian express news, Current AffairsThe selection process will be based on the shortlisting and interviews of candidates for the posts of Manager (Performance Planning & Review), Advisor (Fraud Risk).. File

State Bank of India (SBI) on Sunday said ABG Shipyard Ltd is presently undergoing “liquidation under an NCLT driven process” and there was no “effort to delay the process” at any point of time. The account has been declared a fraud involving Rs 22,842 crore.

Although ICICI Bank was the lead lender in the consortium and IDBI Bank was the second lead, it was preferred that SBI being the largest PSB lender, lodges the complaint with CBI, SBI said. “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.

According to SBI, 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 December 2020. The account is presently undergoing liquidation under an NCLT (National Company Law Tribunal) driven process, the state-run bank added.

The account was initially restructured under the CDR mechanism in March 2014 by all lenders. However, as the shipping industry was going through a downturn, one of the worst ever seen, the operations of the company could not revive, SBI said.

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As the restructuring failed, the account was classified as non-performing asset (NPA) in July 2016 with backdated effect from November 30, 2013. E&Y was appointed the forensic auditor by lenders in April 2018, and it submitted its report on January 2019.

“E&Y report was placed before the fraud identification committee of 18 lenders in 2019. Fraud is mainly attributed to diversion of funds, misappropriation and criminal breach of trust,” SBI said.

A fraud is declared on the basis of forensic audit report findings, which are discussed thoroughly in joint lenders meetings. Typically, when fraud is declared, an initial complaint is preferred with CBI, and based on their enquiries further information is gathered, SBI said.


In a few cases, when substantial additional information is gathered, a second complaint incorporating full and complete details is filed which forms the basis for the FIR. “At no point in time, there was any effort to delay the process. The lender’s forum diligently follows through with CBI in all such cases,” the bank said.

Incorporated on March 15, 1985, ABG Shipyard had banking arrangements since 2001. It was financed under consortium arrangement by over two dozen lenders, led by ICICI Bank. Due to poor performance, the account became an NPA on November 30, 2013. Several efforts were made to revive the company operations but could not succeed, SBI said.

First published on: 14-02-2022 at 04:03 IST
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