SBI denies any effort to delay action against ABG Shipyard promoters in ₹22,842 cr bank fraud case

The account was restructured under the CDR mechanism in March 2014 by all lenders.

State Bank of India (SBI) has clarified that at no point in time, there was any effort to delay the process to recover dues from the promoters of bankrupt Ltd.  SBI was reacting to a PTI report on the booking the former top executives including former chairman of ABG Shipyard Rishi Kamlesh Agarwal in a bank fraud case amounting to ₹22,842 crore. Providing a chronology of events, SBI in a statement said, “ABG Shipyard was incorporated on March 15, 1985, has been banking arrangements since 2001. Financed under Consortium arrangement over a two dozen lenders.” It said 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.   The account was 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.   “As the restructuring failed, the account was classified as NPA in July 2016 with backdated effect from November 30, 2013,” it said. E&Y was appointed as Forensic Auditor by lenders during April 2018 and they submitted their report on January 19. 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.   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, it added. “ The first complaint was filed with CBI in November 2019. There was a continuous engagement between CBI and Banks and further information was getting exchanged,” the lender 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 December 2020. The account is presently undergoing liquidation under an NCLT driven process,” it said.   A fraud is declared basis the Forensic Audit report findings that are discussed thoroughly in joint lenders meetings, it said. “Typically when fraud is declared, an initial complaint is preferred with 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,” it said. “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,” it added.