The Biggest ever Bank Loan Fraud

After the bank fraud done by Vijay Mallya, Nirav Modi and Mehul Choksi, a new Bank Scam has come into picture of Rs. 22842 crores. This bank loan fraud in India would be proved the biggest ever loan fraud if found to be true in investigation.

The Accused of Bank Loan Fraud

CBI declared ABG Shipyard Ltd. the primary accused and the Chairman of the company named Kamlesh Agarwal is the secondary defendant as he signed the loan agreement. Apart from them the director of the executive director and three other directors are defendant in this case. Their names are Santhanam Muthaswamy, Ashwini Kumar, Sushil Kumar Agarwal, Ravi Vimal Nevetia respectively. This list of defendants also includes an affiliate business ABG International Private Limited and unspecified governmental officers and non-government people.

One of India’s key players in vessel construction, the ABG Shipyard Ltd. has shipyards company in Gujarat’s Surat and Dahej where it has the capacity to manufacture boats up to 18,000 dead weight tones (DWT) and 1,20,000 DWT.

Bank loan Fraud
ABG Shipyard Ltd.

“Dead Weight tonnage (DWT): Dead weight tonnage (DWT) shows the capacity of a ship that how much weight a ship can carry. It includes the sum of the total of the weights of cargo, fuel, fresh water, ballast water, provisions, passengers, and crew

How did the Bank Loan Fraud do?

As part of the 28-bank consortium, it was claimed that ABG Shipyard Ltd. had defrauded the branches of the erstwhile State Bank of Patiala, Commercial Finance Branch, New Delhi, and the erstwhile State Bank of Travancore. As per the CBI news declaration, the joint venture was led by ICICI Bank.

As stated in the FIR, the accused company is charged of having outstanding loan with ICICI Bank of Rs 7,089 crore, State Bank of India (SBI) of Rs 2,925 crore, Punjab National Bank of Rs 1,243 crore, IDBI Bank of Rs 3,539 crore, Exim Bank of India of Rs 1,327 crore, Indian Overseas Bank of Rs 1,228 crore and various other banks and financial institutions.

The Ernst and Young has exposed in their forensic audit that between 2012 and 2017, the defendants conspired and engaged in illegitimate acts, including the diversion of cash for purposes other than the ones for which the loan was given by the bank. The corporation allegedly gave large sums to numerous parties

A large amount of funds was revealed to have been invested in the offshore subsidiary as well. Additionally, money from banks was allegedly used to purchase huge assets in the names of the people involved. In July 2016, the loan account was labeled a non-performing asset (NPA).

“Consortium Bank: A consortium bank is a bank created by several banks to fund a project that is too huge for one bank to do alone. The purpose of creating a consortium bank is to leverage the assets of individual banks. All members in a consortium bank have equal ownership and no one bank has a controlling interest.

According to Ernst and Young’s forensic audit, the accused conspired and performed illegal acts such as money laundering, embezzlement, and unlawful breach of trust between 2012 and 2017. This is the largest instance of bank fraud ever investigated by the FBI’s Central Division (CBI). According to the report, money was being utilized for reasons other than those for which banks had authorized its release. In July 2016, the loan account was labeled a non-performing asset (NPA).

Bank Loan Fraud

How to Prevent Bank Loan Frauds?

At the time when India is seeing a dip in its economy due to pandemic and various other reasons, this bank loan fraud of Rs. 22842 crores will hamper the economy more. India must curb these types of fraud by making a strong policy. Already Neerav Modi, Vijay Mallya and Mehul Chowkasi have done big scams in bank loans. And also, they succeed in fleeing away from the country. The country where farmers are committing suicide due to the burden of only small or medium loan amount, this type of huge bank loan fraud is a question mark before the government. The government must take it seriously and punish the accused severely.


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