MUMBAI : Rishi Agarwal, the former promoter of fallen shipbuilder ABG Shipyard Ltd, has been arrested by the Central Bureau of Investigation (CBI) in what is dubbed as India’s biggest bank loan scam of ₹22,000 crore.
ABG Shipyard had created a web of transactions to cheat a consortium of 28 banks to the tune of ₹22,842 crore in between 2012 and 2017, in a case which has come to light a few months back. The banks include State Bank of India (SBI), IDBI and ICICI.
ABG Shipyard bank fraud timeline:
1985 – The flagship firm of the ABG Group – ABG Shipyard Ltd – is incorporated. Promoted by Rishi Agarwal, it is in the business of shipbuilding and repair, with shipyards in Gujarat’s Dahesh and Surat. A consortium of 28 banks, with ICICI as the leading bank, finance it.
2005-2010 – The banks continue to lend generously to ABG Shipyards despite signs of trouble from a global financial crises in 2008.
2008 – The global financial crises, led by the US housing bubble and the collapse of Lehman Brothers, hits ABG Shipyards. The company now has a paucity of working capital, which caused “significant increase in the operating cycle, thereby aggravating the liquidity and financial problem”
March 2014 – Under corporate debt restructuring or CDR, the SBI attempts to re-structure loans to ABG Shipyard. The re-structuring fails as ABG Shipyards is unable to service the interest and instalments on the due date.
July 2016 – The ABG account is declared an NPA, with back-dating to 30 November, 2013.
August 2017- The firm was part of the dirty dozen (12 big NPAs which included Essar, Bhushan, Jaypee and Amtek, among others) identified by the RBI for bankruptcy proceedings.
The lead bank, ICICI Bank, filed an application under the IBC with total claims to the tune of ₹27,400 crore due to banks, the government, employees and operational creditors.
Jan 2019 – SBI identifies a scam.
Jan 2019 – Ernst and Young LLP conducts forensic audit on ABG Shipyard. It finds evidence of fraud between April 2012 and July 2017. The audit shows that fraud was conducted through “diversion of funds, misappropriation, and criminal breach of trust, with an objective to gain unlawfully at the cost of the bank’s funds.”
ABG Shipyard availed mainly three different types of loans from a consortium of 28 banks. The monies raised through these loans were then diverted through 98 sister concern firms and mainly used to create personal assets.
November 2019 – SBI files a complaint.
August 2020 – SBI files a more comprehensive complaint
7 February 2022 – CBI registers a case, books ABG Shipyard and ABG International Private Ltd.
The CBI FIR says ABG SL owes around ₹22,842 crore. It owes ICICI, which was leading the consortium, ₹7,089 crore, SBI ₹2,925 crore, IDBI Bank ₹3,639 crore, Bank of Baroda ₹1,614 crore, Punjab National Bank ₹1,244 crore, Exim Bank ₹1,327, Indian Overseas Bank ₹1,244 crore, and Bank of India ₹719 crore, among others.
15 February, 2022 – The CBI issues lookout notices against Agarwal, and ABG executives Santhanam Muthuswamy and Ashwini Kumar