ABG Shipyard fraud: SBI says no delay in filing of case, ICICI Bank was leader in consortium

“The leader in consortium was ICICI Bank. Due to poor performance, the account became NPA on November 30, 2013. Several efforts were made to revive the company operations but could not succeed,” State Bank said in a statement sent to ETV Bharat.

New Delhi:India’s largest public sector bank State Bank of India, which is one of the banks in the consortium of over two dozen banks that lent money to ABG Shipyard Limited, the company accused of committing a bank fraud of over Rs 22,800 crore, Sunday said it did not delay in filing the FIR against the accused company and the lenders have been diligently following the case with the investigation agency.

SBI said ABG Shipyard was incorporated on 15 March 1985 and it had banking arrangements with the SBI and its associate banks since 2001. The state-owned bank said the loans to the ABG Shipyard Limited were financed under a consortium arrangement of over a two dozen lenders.

“The leader in consortium was ICICI Bank. Due to poor performance, the account became NPA on November 30, 2013. Several efforts were made to revive the company operations but could not succeed,” State Bank said in a statement sent to ETV Bharat. The Bank said the account was restructured under the CDR mechanism in March 2014 by all lenders but the operations of the company could not be revived as the shipping industry was going through a downturn.

“As the restructuring failed, the account was classified as NPA in July 2016 with backdated effect from 30th November 2013. Ernst & Young was appointed as Forensic Auditor by lenders during April 2018 and they submitted their report on January 19,” it said.

The Bank said Ernst & Young’s forensic audit report was placed before the Fraud Identification Committee of 18 Lenders in 2019 and the fraud was mainly attributed to diversion of funds, misappropriation, and criminal breach of trust. “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,” the bank said after the report of registering of a FIR by the CBI against the company became public.

Did not delay filing complaint with CBI: SBI

SBI said the first complaint was filed with the CBI in November 2019 and there was a continuous engagement between the CBI and the banks and further information was getting exchanged.

“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 a National Company Law Tribunal driven process,” it said.

Elaborating the process followed in such cases, the SBI said a fraud is declared on the basis of the Forensic Audit report findings that 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,” explained the bank.

SBI said in some 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 SBI said.

READ:Explained: CBI's FIR against ABG Shipyard in Rs 22,800 crore bank fraud case