ABG Shipyard Scam: Once the line of banks used to give loan to the company

ABG Shipyard Scam: The foundation of the country's biggest banking scam was laid in the recession of 2008

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new Delhi. In the country’s biggest banking scam, the CBI has registered an FIR against ABG Shipyard Company, some of its top officials, some unknown government officials and private people. This FIR has been registered on a complaint of State Bank of India (SBI). It has been alleged that the accused, through connivance, diverted the money taken in loans from the bank and used them at other places. Carry out many illegal activities.

This whole matter is now under the investigating agencies. At the same time, ABG Shipyard is currently facing insolvency proceedings in the National Company Law Tribunal. But, do you know that there was a time when banks used to line up to give loans to ABG Shipyard. SBI, ICICI Bank, IDBI Bank, Bank of Baroda, Punjab National Bank, Bank of India, Life Insurance Corporation of India, IFCI and Yes Bank used to stand in this queue.

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Built over 165 ships
The company’s yards were located at Dahej and Surat in Gujarat, which are major centers of India’s shipping industry. The company’s Surat yard had a capacity of 18,000 Dead Weight Tonnage (DWT), while the yard at Dahej had a capacity of 120,000 DWT. In the six years prior to 2008, ABG Shipyard has built over 165 ships including bulk carriers, interceptor boats, pusher tugs and flotillas. Business has increased due to orders from Indian and foreign companies.

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Information revealed from the audit report
However, everything changed for the company during and after the global economic crisis, the company soon faced a shortage of working capital and a huge increase in the operation cycle. After 2015, the company’s crisis got worse. After this, Ernst & Young conducted a forensic audit of the company’s financial data for the period April 2012 to July 2017. On 18 January 2019, its report was placed before the group of 28 banks. In this forensic report, it came out that the company diverted the money taken in the loan from the bank and used them for other purposes.

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What will be the effect of the scam on the banks
Banks have declared ABG Shipyard’s account as NPA in 2016. Along with this, provisioning has also been done for its account. This means that no further impact is anticipated on the balance sheets of banks. The damage that was to be done has been done and it has already been compensated. Banks will not get any further shock from this incident.

Tags: banking scam, Business news in hindi

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