Liquor-baron Vijay Mallya continues to be the biggest mystery-word for Indian banks.
Consider this: It’s almost four years since lenders declared loans given to Kingfisher as non-performing assets (NPAs). It is over a year since one of the banks to Mallya, United Bank of India (UBI) classified Mallya as a wilful defaulter (promoters who have the capacity to pay back but wouldn’t do so deliberately, typically an action banks take when fund diversion and financial irregularities are detected), but only to revoke a little later following a court intervention.
Mallya’s exposure to a clutch of 17 banks including State Bank of India (SBI) is now over Rs 7,000 crore with interest overdue. In the latest development, the Central Bureau of Investigation (CBI) has found that Mallya even diverted part of the loan amount to tax haven countries.
But, in spite of all this, banks have miserably failed to make any major recovery from the promoter (Mallya) or the now-defunct Kingfisher.
So far, all efforts to recover funds from Kingfisher by banks have miserably failed. In an attempt take control of Kingfisher and push for a distress sale, banks at one stage, converted a large part of their debt into equity, but with the Kingfisher share turning a penny stock and a defunct airline in hand, even this move was proved to be a bad idea. The result: Banks are today sitting ducks with their Rs7,000 core unpaid dues.