India’s biggest Bank Fraud: DRTA authorised banks to recover Rs 13,975 cr from ABG Shipyard in 2018

Pointing out towards the alleged connivance of BJP led governments at Gujarat and Delhi in India’s biggest bank scam of worth Rs 23,0000 crores; Gujarat based media claimed that the BJP government both in the state and Centre did not act in time, despite several alarms and complaints lodged by lenders against the ABG Shipyard.

In a sensational revelation, Gujarat based media claimed that the Debt Recovery Tribunal Ahmedabad (DRTA) four years ago in 2018 had autorised banks to recover Rs 19, 13,975 crores from the ABG Shipyard but banks did not take any action for some inexplicable reasons.

At that time, the amount was Rs 19,13,975 crores. Had this been recovered, the loss to a consortium of banks would not have reached to Rs 23,000 crores, said the reports.

Dena Bank, ICICI Bank and SBI Bank were first to approach the DRTA seeking action against the ABG Shipyard for not repaying the loan in time. Following the complaint, DRTA in December 2018 had asked the banks to recover the loan from the ABG Shipyard.

If the ABG Shipyard fails to pay the amount, the DRTA said that banks can sell off their properties, reported Dainik Bhaskar.

One of the lenders, SBI, lodged a complaint with the CBI in 2019, following which a case was registered against the Gujarat based company recently.

Incorporated on March 15, 1985, the ABG Shipyard Limited (ABGSL) is engaged in the business of ship building and ship repair.

Promoted by Rishi Agarwal, ABG Group has been a major player in the Indian ship building industry. The company’s shipyards are located at Dahej and Surat in Gujarat.

The SBI in a statement, last week stated that the loans given to ABG Shipyard had become NPA on November 30, 2013, but after a failed debt restructuring, it was “classified as NPA in July 2016 with backdated effect from November 30, 2013.”

Though the top investigative agency is said to have no clue about the promoter Rishi Agarwal, it is said that he left the country long ago and lives in Singapore.

The Congress party has claimed that Agarwal who was frequently seen with the then Gujarat CM Narendra Modi, has taken citizenship of Singapore.

Though the Agarwal led company had bagged several contracts worth millions of dollars between 2002 to 2014 (during the tenure of Modi as the CM) its financial condition started worsening since 2012.

Appointed by lenders, Ernst & Young in its Forensic Audit report from the period of April 2012 to July 2017 said, “The accused (ABG Shipyard) have colluded together and committed illegal activities including diversion of funds, misappropriation and criminal breach of trust and for purposes other than for the purpose for which the funds are released by the Bank.”

Ernst & Young was appointed as forensic auditor by lenders in April 2018 and they submitted their report in January 2019.

The E & Y report was placed before the Fraud Identification Committee of 18 lenders in 2019. CBI registered a case in 2022.

Surprisingly, led by ICICI Bank with the SBI having exposure of Rs 2468.51 crore, a consortium of 28 banks and financial institutions sanctioned loans to the company whose assets were valued less than Rs 200.

When asked, Finance Minister Nirmala Sitharaman defended her government saying the time taken to detect the fraud was less than normal.

It is worth mentioning here that the Modi government took five years to file the first fraud complaint in the Rs 22,842 loan default ABG Shipyard case.

She said the loans were given under the Congress-led UPA regime and the account became a non-performing asset (NPA) in November 2013 and the debt was restructured in March 2014 by all lenders, but it could not be recused.