No PSB bank employees found involved in Rs 14,349 cr ABG Shipyard fraud case: Sitharaman

Finance Minister Nirmala Sitharaman on Tuesday said no public sector bank employees were found to be involved in the Rs 14,349 crore bank fraud by ABG Shipyard Ltd (ABGSL), and CBI has registered a case against the company and its directors last month.

ABG Shipyard was sanctioned loan under consortium arrangement led by ICICI Bank, and the account was declared as non-performing asset (NPA) by the lender banks in August 2013 and afterwards, Sitharaman said in a written reply to the Rajya Sabha.

The loan to the company was later approved for restructuring under corporate debt restructuring (CDR) in March 2014 by CDR empowered group.

Sitharaman said that post-failure of the CDR and classification of the account as NPA, the lender banks appointed EY to conduct a forensic audit of the company. The agency had submitted the forensic audit report (FAR) in January 2019.

Accordingly, in view of the findings of FAR, the account of ABGSL, having principal exposure of Rs 14,349 crore and interest accrued thereon, was declared as fraud by the lead banks on April 25, 2019, she said.

”As per input received from public sector banks, staff accountability has been conducted and no staff lapses/staff involvement in the said fraud has been observed in examination of post NPA staff accountability/post fraud re-examination of staff accountability,” Sitharaman said.

The minister also informed that a complaint with the Central Bureau of Investigation (CBI) was filed by the State Bank of India (SBI) on November 8, 2019, and subsequently, in a meeting of the joint lenders in January 2020, it was decided that SBI should file the complaint on behalf of all consortium lenders.

”Accordingly, the mandate was garnered from all banks, with the last mandate being received on August 25, 2020. SBI filed the revised complaint with CBI on August 25, 2020, and the final complaint, based on further discussions, was filed on December 14, 2020,” she added.

Sitharaman said the CBI has registered a first information report (FIR) against the company and its directors on February 7, 2022.

As many as 27 banks and financial entities were engaged in the consortium lending to ABGSL at the time of loan arrangement, including the erstwhile banks: Oriental Bank of Commerce (OBC), Syndicate Bank, Dena Bank, Andhra Bank and Laxmi Vilas Bank.

The top lenders with the highest amount of exposure to the company are: ICICI Bank Rs 7,089 crore; IDBI Bank Rs 3,639 crore; SBI Rs 2,925 crore; Bank of Baroda Rs 1,614 crore; Punjab National Bank Rs 1,244 crore; Exim Bank Rs 1,327 crore; Indian Overseas Bank Rs 1,228 crore; Bank of India Rs 719 crore; Standard Chartered Bank Rs 743 crore.

Erstwhile Oriental Bank of Commerce, now merged into PNB, had an exposure of Rs 714 crore; Syndicate Bank (now Canara) Rs 408 crore; Dena Bank (now BoB) Rs 406 crore; and Andhra Bank (now Union Bank of India) Rs 350 crore.

Among others, IFCI loaned Rs 300 crore, SBI Singapore Rs 458 crore; and SICOM Ltd Rs 260 crore.

Touted as the biggest bank fraud case, the CBI had booked ABG Shipyard Ltd and its former chairman and managing director Rishi Kamlesh Agarwal along with others for allegedly cheating a consortium of banks on February 14, 2022.