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ABG Shipyard Bank Fraud: India’s biggest bank fraud

The CBI swung into action after registering the FIR on February 7 on a complaint filed by State Bank of India (SBI) on August 25, 2020.

NEW DELHI-  The Central Bureau of Investigation (CBI) on Thursday said that it recently questioned Rishi Agarwal, former chairman and managing director of ABG Shipyard Limited, in connection with its probe into the Rs 22,848 crore alleged banking fraud, said to be India’s biggest. Sources said the agency searched his house on Saturday after which summons were issued.

The agency is investigating the company and its former directors – Rishi Agarwal, Santhanam Muthuswamy and Ashwini Kumar.

The CBI swung into action after registering the FIR on February 7 on a complaint filed by State Bank of India (SBI) on August 25, 2020.

According to CBI, ABG Shipyard and its directors are accused of cheating 28 banks (the consortium is led by SBI) to the tune of 23,000 crore. The agency said that ABG Shipyard availed loans since 2005, but due to non-payment of dues, the account turned non-performing assets (NPAs) in 2013.

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A forensic audit carried out by Ernst and Young in 2019 revealed that the funds were diverted to other related companies, said the CBI, adding that loans were allegedly used for investments through overseas subsidiaries.

The investigating agency said that these loans weren’t used for the purpose availed for, thus violating the agreements.

The SBI first filed a complaint on November 8, 2019 on which the SBI sought some clarifications on March 12, 2020.

The bank filed a fresh complaint in August that year. After “scrutinising” for over one- and-a-half-years, the CBI acted on the complaint, filing the FIR on February 7 this year.

In its complaint, the SBI said that global downturn in economy and the shipbuilding sector had set off the crisis, reported news agency Press Trust of India. It had “impacted the shipping industry due to fall in commodity demand and prices and subsequent fall in cargo demand”.

According to a complaint by the State Bank of India, the company owes ₹ 2,925 crore to the bank, ₹ 7,089 crore to ICICI Bank, ₹ 3,634 crore to IDBI Bank, ₹ 1,614 crore to Bank of Baroda, ₹ 1,244 to Punjab National Bank (PNB) and ₹ 1,228 crore to Indian Overseas Bank (IOB). The funds were used for purposes other than for which they were released by banks, the CBI said.

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