Public sector lender State Bank of India has clarified that the account of ABG Shipyard, a Surat-based ship building company, is currently undergoing liquidation under the National Company Law Tribunal (NCLT) process and there was no effort to delay the proceedings.

The statement comes after the Congress attacked the Narendra Modi government for "dilly-dallying" on India's biggest banking fraud. "Why did it take five years after the liquidation proceedings of ABG Shipyard to launch even an FIR for duping 28 banks of ₹22,842 crore?" Congress general secretary Randeep Singh Surjewala asked in a press conference.

The Central Bureau of Investigation (CBI) had on February 12 registered a case against ABG Shipyard and others including its directors and promoters for causing an alleged loss of ₹22,842 crore to a consortium of banks on a complaint filed by the State Bank of India.

The agency had booked ABG Shipyard’s former chairman and managing director, Rishi Kamlesh Agarwal, along with then executive director Santhanam Muthaswamy, directors Ashwini Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevetia.

"It was alleged that the said accused had cheated the consortium of 28 banks including the branches of erstwhile State Bank of Patiala, Commercial Finance Branch, New Delhi, erstwhile State Bank of Travancore, Commercial Branch, New Delhi, State Bank of India, Overseas Branch, Mumbai etc. The consortium of 28 banks was led by ICICI Bank," the central investigating agency said.

The borrower had colluded together and committed activities by way of diversion of funds for the purpose other than for which the funds were released by the bank, it said, adding that “huge amounts were allegedly transferred by said private company to its related parties and subsequently adjustment entries were made”.

It was also alleged that bank loans to the ship-building firm were diverted and huge investment was found to be made in an overseas subsidiary, CBI said.

The investigating agency also conducted searches at 13 locations including Surat, Bharuch, Mumbai, and Pune and recovered "incriminating documents".

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, India's largest public sector bank 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 said.

ABG Shipyard, which was incorporated on March 15, 1985, has been under banking arrangements since 2001, according to SBI. "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," it said.

After the restructuring failed, ABG Shipyard's account was classified as NPA in July 2016, with backdated effect from November 30, 2013, the SBI said. Subsequently, audit firm E&Y was appointed as forensic auditor by lenders during April 2018. SBI said the circumstances of the fraud, as well as CBI requirements, were further deliberated in various meetings of joint lenders and a fresh and comprehensive second complaint was filed in December 2020.

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