Vijay Mallya may quit UBL board if declared 'wilful defaulter'
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Vijay Mallya may quit UBL board if declared 'wilful defaulter'

Last Updated: Monday, August 18, 2014, 10:38
 
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Vijay Mallya may quit UBL board if declared 'wilful defaulter'
Zee Media Bureau

New Delhi: Liquor baron and Vijay Mallya might be forced to exit from the board of his liquor compaies United Spirits Ltd (USL) and United Breweries Ltd (UBL) if he is slapped with the 'wilful defaulter' tag.

Three major PSU banks SBI, PNB and IDBI may soon initiate the process to declare Kingfisher Airlines and others as wilful defaulters after the firms failed to service their debt, as per sources.

The Department of Financial Services, after reviewing top 50 Non Performing Accounts (NPAs) of public sector banks, has asked the state-owned banks to initiate action against those defaulters, sources added.

Vijay Mallya-promoted Kingfisher Airlines has an outstanding debt of about Rs 4,022 crore to a consortium of banks, led by SBI.

United Bank of India, part of the consortium, has already initiated the process to declare the company a wilful defaulter.

Once a company is declared wilful defaulter, criminal proceedings can be initiated against promoters and directors of the company. Besides, they would not be allowed to raise fresh funds from banks and set up new ventures for five years.

As per RBI guidelines, it would have to be proven that the borrower had diverted funds which he took from the bank and was not paying up despite having the ability to pay.

Kolkata-based United Bank of India was the first PSU lender to initiate the process of declaring Vijay Mallya and three other directors on the grounded Kingfisher Airlines as wilful defaulter.

The consortium led by SBI has also initiated the process of recovery.

Earlier in the day, IDBI Bank said it is not being probed by the CBI over the Rs 950-crore loan extended to KFA but investigation was being carried out against the borrower.

"The preliminary enquiry initiated by the CBI a few months ago is against the borrower, Kingfisher Airlines Ltd and not against IDBI Bank," IDBI Bank said in a statement.

As part of the recovery process, banks in February last year decided to sell a portion of the collateral with them, including shares of group companies United Spirits Ltd and Mangalore Chemicals & Fertilizers Ltd, Mallya's Goa villa, Kingfisher House in Mumbai and the Kingfisher brand, which was valued at over Rs 4,000 crore at the time it was pledged.

The banks seeking possession and sale of the property are State Bank of India, Axis Bank Ltd, Bank of Baroda, Bank of India, Central Bank of India, Corporation Bank, Federal Bank Ltd, IDBI Bank Ltd, Indian Overseas Bank, Jammu & Kashmir Bank Ltd, Punjab & Sind Bank, Punjab National Bank, State Bank of Mysore, UCO Bank, and United Bank of India.

With PTI Inputs



First Published: Monday, August 18, 2014, 10:38


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