The former owner and chairman of India’s ABG Shipyard has been arrested in the country’s biggest ever fraud case.

Rishi Agarwal was held by the Central Bureau of Investigation (CBI) on Wednesday on charges of criminal conspiracy, cheating, criminal breach of trust and abuse of official position, domestic media reported.

The fraud involves alleged misuse of INR 228bn ($2.8bn) in bank loans.

A total of 28 lenders had handed over cash to ABG, a specialist in offshore support vessels and bulkers.

The State Bank of India (SBI) alone had an exposure of INR 24.7bn, CBI officials said.

A forensic audit carried out by Ernst & Young has uncovered alleged wrongdoing, reports said.

The loans were declared a non-performing asset (NPA) in July 2016 and a fraud probe began in 2019.

ABG built 85 ships from 1996 to 2013, largely offshore units and bulkers, but also ferries and general cargo ships.

UK shipbroker Clarksons still lists the shipbuilder as having a 16,000-hp anchor-handling tug supply ship on order for Varada Marine, due in January 2024.

This AHTS vessel was contracted in 2010.

TradeWinds reported in 2019 that a liquidator had been appointed for the yard on the order of India’s National Company Law Tribunal (NCLT).

ABG’s bankruptcy restructuring was approved by NCLT in 2017.

Lender ICICI, which applied for the process, said the struggling yard had defaulted on INR 45bn of loans.