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PNB declares Vijay Mallya’s UB Holdings as wilful defaulter

Shares of United Breweries (Holdings) plunged by 11.23 per cent as the PNB move to slap ‘wilful defaulter’ tag is likely to hit UB’s fund-raising plans.

By: ENS Economic Bureau | Mumbai | Published: February 17, 2016 1:17 am

Punjab National Bank, which is reeling under huge non-performing assets (NPAs) has declared United Breweries (Holdings) Ltd controlled by Vijay Mallya as a ‘wilful defaulter’. The bank is proceeding against the company as it was a guarantor to the Kingfisher loan.

Shares of United Breweries (Holdings) plunged by 11.23 per cent as the PNB move to slap ‘wilful defaulter’ tag is likely to hit UB’s fund-raising plans.

“The company is in consultation with its legal counsels to challenge the decision by taking appropriate legal action that may be required in this regard,” UB (Holdings) said in a stock exchange filing. Kingfisher Airlines owes around Rs 7,000 crore to various lenders. The RBI had recently brought guarantors also under the wilful defaulter category. If the guarantor refuses to comply with the demand made by the bank, despite having sufficient means to make payment of the dues, such guarantor would also be treated as a wilful defaulter, the RBI norms say.

Earlier, United Bank of India and SBI have also identified UB Holdings as a wilful defaulter.

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The RBI has defined a wilful default as deliberate non-payment of the dues despite adequate cash flow and good networth, siphoning off of funds to the detriment of the defaulting unit, assets financed either not been purchased or been sold and proceeds have been misutilised, misrepresentation or falsification of records, disposal or removal of securities without bank’s knowledge and fraudulent transactions by the borrower.

While bankers say most of the wilful default cases are allegedly frauds committed by the promoters and money has been siphoned off from the companies, cases filed by banks have been lingering in the courts and debt recovery tribunals for many years. Although the RBI has said wherever possible, the banks should adopt a proactive approach for a change of management of the wilfully defaulting borrower unit, this rarely happens.

On February 12, SBICAP Trustee Company, a wholly owned subsidiary of SBI Capital Markets, said in a newspaper notice it would hold an e-auction of Kingfisher House, Kingfisher Airlines’ corporate office in Mumbai, on March 17. The reserve price for the property has been set at Rs150 crore. The auction is part of the recovery process of dues from the airline’s promoter Vijay Mallya, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

The notice said Mallya owed banks over Rs 6,963 crore. The land along with the building measures around 3,988 sq m, according to the public notice. Lenders have not been able to recover loans and their efforts have met with multiple hurdles.

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  1. R
    Feb 19, 2016 at 4:30 am
    in a place where farmers get killed for just rs 25000/- loan, here is a guy with money and political power utilize all loop s of financial systems and get away !!!! this is the plight of poor - commoner here !!!!
    1. S
      Feb 17, 2016 at 7:15 am
      While this a typical legerdemain of Indian Crony capitalism, one must not forget the Ice Berg that sank the anic. Kingfisher was addressing a specific market segment. The Business Traveller who was sick of the insouciance of India's public sector carrier and different from the other private Indian operators who were addressing the low cost market. Kingfisher was doing quite well until it hit the turbulence created by Sonia hi's Sharad Pawar's Praful Patel (Yes, the same member of Manmohan's "Coalition Dharma" aka "parivar-that-loots-together-to-stay-together who bought Honest Antony's wife's paintings for Air India). Patel bought an enormous number of Boeing aircraft that nobody wanted and Air India's plans and estimates did not warrant for Air India that drowned the Indian Air Penger market with excess capacity sinking Kingfisher. Air India would have drowned too. But, because it is a Public Sector, it has been kept flying at the cost of India's growing deficit, inflation and other tax payers. Praful Patel then went on to sell Air India's newly acquired Aircraft at far below cost to Etihaad Airlines. He also sold several of Air India's prized and high potential routes and landing rights. The people of India have and are paying far more for the Air India black that Sonia's Pawar's Patel made than The King Fisher debt which is merely a part of the w. It would be good when superficial Journalists, Bankers, Central Bankers and Politicians refer to Vijay Mallya's Kingfisher, that they also refer to the Senior and bigger of the Siamese Twins that has drained the Public coffers. Praful Patel's Air India. (I wonder whether Pawar's Baramati and Mallya had a spat over liquor too leading to the enormous bill presented to Indian Citizens by Praful Patel ?)