ABG Shipyard fraud: Banks’ detection faster than usual, says FM Sitharaman

ABG Shipyard fraud: Banks’ detection faster than usual, says FM Sitharaman


The consortium of banks involved in lending to ABG Shipyard, which turned NPA and then a fraud, followed all due processes and detected and determined the fraud faster than the usual time taken of 52-54 months, Finance Minister said on Monday.

“The process has been going on from 2014. In general for any account, determining the element of fraud almost takes 52-54 months. I should say to the credit of the banks, they have taken less time than the average to detect the fraud. A forensic audit was done. Every evidence was collected and given to the Central Bureau of Investigation. Meanwhile in parallel an NCLT process is also ongoing,” Sitharaman said.

The Finance Minister was addressing a media briefing along with Reserve Bank of India Goveror Shaktikanta Das, after the RBI’s board meeting in New Delhi.

The alleged Rs 22,842 crore fraud by is the largest fraud detected in the Indian banking system yet. The lead bankers were ICICI Bank and IDBI Bank but the complaint was first filed by State Bank of India to CBI in 2019.

ABG’s account was declared non-performing asset in November 2013. Several efforts were made to revive the company and in 2014 a comprehensive restructuring began in March 2014. When that failed, the account was again classified as NPA in July 2016. E&Y was appointed as the forensic auditor in 2018.

The CBI last week booked the shipping company’s directors and will examine the involvement of ‘public servants’ in the fraud.

“I don’t want to politicize this too much as I am sitting in the RBI office, but these noises are being made of how this is the biggest fraud under this government. One should not forget that the account was first declared NPA in 2013,” Sitharaman said.

At the same briefing, RBI Governor Das touched upon high crude prices and said that the central bank’s retail inflation outlook for FY23 was quite ‘robust’. The price of brent crude touched $95 a barrel today, a seven-year high, on fears that Russia’s invasion of Ukraine is imminent, and the possible supply disruptions resulting from that.

“When you do inflation projection, you assume a crude price for the whole year, a particular price and a range of prices. If you take $95 a barrel and make a projection for the entire year you will definitely go wrong. It may go up further and come down steeply,” Das said.

“We have made our inflation projections based on many factors that can be anticipated and foreseen as of today. We have modeled within that. At this point of time, our inflation projections are quite robust,” he said. The central bank has projected average CPI inflation of 4.5 percent in FY23.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *