Loans to ABG Shipyard turned NPAs prior to 2014, says FM Sitharaman

Normally banks take 52-56 months of time to detect such cases and initiate follow-up actions, said Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on Monday said the ABG Shipyard account turned NPA during the erstwhile UPA regime and the banks took lesser than normal time to detect the fraud perpetrated by the shipping firm.

"...in this particular case with that kind of a measurement, actually, I should say to the credit to the banks, they've taken lesser than what is normally an average time to detect these kinds of frauds," Finance Minister Nirmala Sitharaman said at a press conference after addressing the members of the RBI board.

The minister said normally banks take 52-56 months of time to detect such cases and initiate follow-up actions.

The Central Bureau of Investigation (CBI) recently booked ABG Shipyard Limited, its former chairman and managing director Rishi Kamlesh Agarwal and others for allegedly cheating a consortium of two dozen lenders led by ICICI Bank.

ABG Shipyard fraud is much higher than the one perpetrated by Nirav Modi and his uncle Mehul Choksi, who allegedly cheated the Punjab National Bank (PNB) of around Rs 14,000 crore through issuance of fraudulent Letters of Undertaking (LoUs).

Sitharaman also said that during the NDA regime, health of banks has improved and they are in position to raise funds from the market.

Addressing the press conference, the RBI Governor Shaktikanta Das asserted that RBI's inflation projections are quite robust. He further said the momentum of inflation, from October 2021 onwards, is on a downward slope.

"It's primarily the statistical reasons the base effect which is leading to higher inflation especially in third quarter, and the same base effect will play in different ways in the coming months," Das said.