How did ABG shipyard orchestrate India’s biggest bank fraud?

by Banking Desk

Bank frauds are becoming common in India. In the past few years, India has seen many bank frauds. These big frauds are crippling the banking health of the country. Once again the case of bank fraud has come to the fore. This fraud of Rs 22,842 crore is by far the biggest banking fraud in Indian banking history. This biggest scam in banking history has come to light in Gujarat. On the complaint of State Bank of India (SBI), the Central Bureau of Investigation (CBI) has registered an FIR against 8 people including ABG Shipyard and its former Chairman and Managing Director Rishi Kamlesh Agarwal for cheating 28 banks. The CBI has named ABG Shipyard Limited Chairman Rishi Kamlesh Agarwal, Managing Director Santhan Muthaswamy and three directors Ashwini Kumar, Sushil Kumar Agarwal and Ravi Viman Nevetia as accused in this case. In this context, let’s have a look at this scam.

 About ABG Shipyard:

ABG Shipyard Company is involved in shipbuilding and repair work. Its shipyards are located at Dahej and Surat in Gujarat.  According to the CBI FIR, the names of two major companies involved in the fraud are ABG Shipyard and ABG International Private Limited.  Both the companies belong to the same group. 

The Fraud:

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According to the FIR, this scam is done from April 2012 to July 2017. It is alleged that fraudulent money from banks was also routed abroad and many properties were bought. Money was sent from one company to another, flouting all the rules and regulations.

ABG Shipyard took a loan of Rs 22,842 crore in the name of the business from 28 different banks between April 2012 and July 2017. It is alleged that the company misused the amount received from the loan. Instead of using money in business, ABG Shipyard created assets out of loans taken in the name of the business and used it for other purposes.

How much company owes to banks?

According to the complaint of SBI’s DGM, the company owes Rs 7,089 crore to ICICI Bank, Rs 3,634 crore to IDBI Bank, Rs 2,468 crore to SBI, Rs 1,614 crore to Bank of Baroda, Rs 1,244 crore to Punjab National Bank, 1,228 crores to Indian Overseas Bank. Apart from these, 22 more banks have outstanding dues of 5,108 crores.

 How did this fraud come to light?

The bank had first filed the complaint on November 8, 2019, on which the CBI had sought some clarifications on March 12, 2020. The bank filed a new complaint in August that year. After investigating for more than one and a half years, the CBI acted on the complaint and registered the FIR on February 7, 2022.

Recent big banking frauds:

  • Vijay Mallya case: In July 2015, the fraud by businessman Vijay Mallya came to the fore. This scam was related to fraud of 9 thousand crore rupees. He defrauded 17 banks in the country.
  • Nirav Modi case: In January 2018, the case of Nirav Modi made the headlines. In this, a loan of Rs 13,570 crore was made from Punjab National Bank (PNB).
  • ABG Shipyard: Now, this is being dubbed as the biggest banking fraud. In this, there is an allegation of fraud of 22, 842 crore rupees from 28 banks.

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