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ABG Shipyard loan fraud: SBI, ICICI Bank shares on a bumpy ride

ABG Shipyard loan fraud: SBI, ICICI Bank shares on a bumpy ride

The shares of country's largest lender State Bank of India ended 2 per cent lower at Rs 514.15 on the BSE. The market cap of the lender fell to Rs 4,58,858.90 crore.

ABG Shipyard loan fraud: SBI, ICICI Bank shares on a bumpy ride ABG Shipyard loan fraud: SBI, ICICI Bank shares on a bumpy ride

Of late, the shares of SBI and ICICI Bank have been on a bumpy ride as the ABG Shipyard scam has impacted some of the major banks in India. The scam is the largest the country has ever seen, surpassing even the PNB scam pulled off by diamantaire Nirav Modi and Mehul Choksi. 

The shares of country's largest lender State Bank of India ended 2 per cent lower at Rs 514.15 on the BSE. The market cap of the lender fell to Rs 4,58,858.90 crore. The shares stand higher than 50 day, 100 day and 200 day moving averages but lower than 5 day and 20 day moving averages.

Likewise, ICICI Bank shares ended 1.69 per cent lower at Rs 763 against the previous close of Rs 776.15. Market cap of the bank fell to Rs 5,29,977.61 crore on the BSE. 

With an exposure of Rs 22,842 crore, a consortium of 28 banks, led by the State Bank of India (SBI) and ICICI Bank, has been defrauded by the Gujarat-based ship-building company's directors and promoters. 

SBI and ICICI Bank, otherwise known as 'too big to fail', have an exposure of Rs 2,925 crore and a staggering Rs 7,089 crore, respectively. ICICI Bank has the highest exposure in terms of loan granted to ABG Shipyard. The fraud was first reported by SBI on November 8, 2019. 

Amid allegations of delay in filing of complaint, SBI said it has been diligently following the ABG Shipyard fraud case with the Central Bureau of Investigation (CBI) following the forensic audit report.

IDBI Bank is another bank that has been exposed. It gave a loan amounting to Rs 3,639 crore to the company. IDBI Bank and ICICI Bank have been the worst-hit lenders by the scam. 

Recently, SBI reported a good set of numbers for the quarter ended December 2021. The bank posted a 62.27 per cent year-on-year (YoY) jump in its net profit to Rs 8,431.9 crore. The net interest income (NII) of India's largest public-sector lender rose 6.48 per cent on-year to 30,687 crore from Rs 28,820 crore.

Similarly, ICICI Bank reported a 25 per cent YoY rise in its net profit for the October-December quarter. NII rose 23 per cent YoY to Rs 12,236 crore in Q3, while net interest margin stood at 3.96 per cent during December 2021 as against 3.67 per cent in the same quarter a year ago and 4 per cent in the quarter ended September 30, 2021.

According to an FIR filed by the CBI on SBI's complaint, a forensic audit carried out by Ernst & Young disclosed that from April 2012 to June 2017, loans given to ABG Shipyard were siphoned off and were utilised to buy assets for its related parties. The company allegedly also pumped in some of these loans in its overseas subsidiary. 
 

Published on: Feb 16, 2022, 4:11 PM IST
Posted by: Tanya Aneja, Feb 16, 2022, 4:07 PM IST