ABG Shipyard loan fraud

ABG Shipyard loan fraud is a major financial scandal in India involving the diversion of bank loans and money laundering by the promoters of ABG Shipyard. They are accused of defrauding a consortium of 28 banks of ₹22,842 crore (US$2.7 billion) between April 2012 and July 2017.[1]

Background

ABG Shipyard was once operating yards in Surat and Dahej. It obtained loans from 28 banks including ICICI Bank, State Bank of India, IDBI Bank, Bank of Baroda, and others primarily between 2005 and 2012 for ship construction.[2] The company’s financial condition worsened rapidly after 2011–12, the year it earned its highest revenue. While it was first blamed on the global shipping crisis, the State Bank of India stated that the problem began with a drop in commodity demand and prices, which reduced cargo demand. This led to order cancellations, rising inventory, and eventually serious financial problems in the company’s records.[3]

In March 2014, the company started a corporate cebt restructuring plan in which banks gave relief by allowing a break on interest payments, extending repayment time, and reducing interest rates. Despite this, the company suffered a loss of over ₹900 crore (US$110 million) the next year, and its bank loans rose to arround ₹4,300 crore (US$510 million). The plan failed, and the company later admitted it had defaulted on loan payments. Banks then declared its accounts as non-performing assets from 13 November 2013. In 2017, ICICI Bank started insolvency proceedings at the National Company Law Tribunal, which ordered the company’s liquidation in April 2019. The largest claims are from ICICI Bank of ₹7,089 crore (US$840 million), followed by IDBI Bank of ₹3,639 crore (US$430 million) and SBI of ₹2,925 crore (US$350 million).[3]

But, the fraud was detected when banks commissioned a forensic audit by Ernst & Young and discovered ₹22,842 crore (US$2.7 billion) embezzlement.[1] As per the findings of the audit, the Central Bureau of Investigation registered a case in February 2022 on a complaint from the State Bank of India.[4] Later, the Enforcement Directorate initiated a money laundering probe, attaching assets worth ₹2,747 crore (US$320 million).[5][6][7]

Investigations

Investigators found that the company diverted loan money to related parties and hid it through accounting entries. Instead of using the loans for shipbuilding, some funds were invested in overseas subsidiaries in Singapore. They also discovered fake contracts, misuse of letter of credit and bank guarantees, and the creation of 27 shell companies with money routed through 38 Singapore entities to move funds and invest in tax havens. In addition, properties were bought in the names of related people, and a ₹75 crore (US$8.9 million) crore advance from the Indian Navy for training ships was allegedly not used for its intended purpose.[8]

As of 2026, the court proceedings are still going on and the company is undergoing liquidation.[9]

References

  1. ^ a b "CBI books ABG Shipyard, others for 'causing ₹22,842-cr. loss' to banks". The Hindu. 2022-02-12. ISSN 0971-751X. Retrieved 2026-03-14.
  2. ^ "Explained: What the SBI, ABG Shipyard Rs 22,892 crore controversy is all about". The Times of India. 2022-02-16. ISSN 0971-8257. Retrieved 2026-03-14.
  3. ^ a b Srinivasan, Sriram (2022-02-19). "Explained | How did the ABG Shipyard fraud happen?". The Hindu. ISSN 0971-751X. Retrieved 2026-03-14.
  4. ^ Verma, Nidhi (13 February 2022). "India files complaint against ABG Shipyard alleging $3 billion bank fraud". Reuters. Retrieved 14 March 2026.
  5. ^ "ED attaches assets worth ₹2,747.69 crore in ABG Shipyard case". The Hindu. 2022-09-22. ISSN 0971-751X. Retrieved 2026-03-14.
  6. ^ "ABG Shipyard fraud: ED attaches assets worth Rs 2,747 crore in money laundering probe". Scroll.in. 2022-09-22. Retrieved 2026-03-14.
  7. ^ "ED attaches assets worth ₹2,747.69 crore in ABG Shipyard case". BusinessLine. 2022-09-22. Retrieved 2026-03-14.
  8. ^ Ohri, Raghav (2024-01-17). "India's biggest bank fraud case: How ABG Shipyard steered the scam ship to divert funds". The Economic Times. ISSN 0013-0389. Retrieved 2026-03-14.
  9. ^ Nair, Avinash (2022-02-17). "Explained: Rise and fall of Gujarat's ABG Shipyard, now under probe for fraud". The Indian Express. Retrieved 2026-03-14.

Further reading

This article is issued from Wikipedia. The text is available under Creative Commons Attribution-Share Alike 4.0 unless otherwise noted. Additional terms may apply for the media files.