CBI probe into IDBI Bank loan to Kingfisher Airlines
New Delhi/Mumbai: The Central Bureau of Investigation (CBI) has served an inquiry notice on IDBI Bank over a loan of Rs 950 crore it extended to Vijay Mallya-led troubled airline Kingfisher Airlines, saying this extent of exposure was not bona fide.
The probe agency`s notice to IDBI comes days after it arrested the chairman and managing director of Syndicate Bank S.K. Jain for allegedly accepting bribes from some companies, notably Bhushan Steel, to hike their credit limits without basis.
"The notice to IDBI Bank pertains to a PE (preliminary enquiry) into its role on a loan to Kingfisher Airlines -- how it (the bank) sanctioned Rs 950 crore, when the airline`s net worth was negative," a CBI officer told IANS.
"This was also the bank`s first exposure to the airline. There was no need for the bank to have taken such an exposure that, too, outside of the consortium when the loans of other banks were getting stressed," the officer said, requesting anonymity.
Asked to respond, IDBI Bank Chairman and Managing Director M.S. Raghavan said: "We are aware of this particular case. In the latest notice, the CBI has sought replies to certain queries as part of ongoing investigations to which we shall reply in the next few days."
He said such responses were sought and given even in the past.
"We have nothing to hide. The loans were extended as part of the consortium or multiple banking, after making thorough appraisals, as required," Raghavan added.
The airline, which has suspended operations since October 2012, owed its consortium of banks led by the State Bank of India as much as Rs 7,500 crore.
Last week, the CBI not only arrested Syndicate Bank chief S.K. Jain for allegedly accepting bribes but also some others in this connection, including Ved Prakash Agarwal of Prakash Industries and Neeraj Singhal of Bhushan Steel.
Punjab National Bank has outstanding dues of Rs 800 crore to Kingfisher, Bank of India Rs 650 crore and Bank of Baroda Rs 550 crore.
Among the others, United Bank of India has Rs 430 crore, Central Bank of India Rs 410 crore, UCO Bank Rs 320 crore, Corporation Bank Rs 310 crore, State Bank of Mysore, Rs 150 crore, Indian Overseas Bank Rs 140 crore, Federal Bank Rs 90 crore, Punjab and Sind Bank Rs 60 crore and Axis Bank Rs 50 crore.
SBI Chairman Arundhati Bhattacharya had earlier stated that the process of recovery of dues from Kingfisher Airlines is going on but there were legal challenges.
She had claimed that from the sale of Airlines' share, the bank was able to recover in the range of Rs 350 to Rs 400 crore.
This year All India Bank Employees Association has come up with the list of wilful defaulters in which Kingfisher Airlines is leading the tally with a with Rs 2,673 crore loan.
According to the Association, total NPAs in the public sector banks till September 2013 touched Rs 2.36 lakh crore.
Last year, CBI had initiated an inquiry into cases of defaulters of big loans from public sector banks. CBI chief Ranjit Sinha had said bulk of non-performing assets were connected to 30 defaulter accounts.
"A bulk of NPA is from top 30 accounts which is learnt to be running into thousands of crores. CBI has already initiated inquiry into some of the big defaulter accounts," Sinha said.
He said the banks were often reluctant to fix accountability of their staff, resulting in difference of opinion between them and the agency regarding the role of public servants.