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FE Exclusive: Mallya offers Rs 2000 cr to settle pending dues, banks won’t buy

The settlement offer made by Vijay Mallya, however, was turned down by the consortium of banks - led by SBI.

Vijay Mallya speaks to the media during a news conference in Mumbai. Reuters Vijay Mallya speaks to the media during a news conference in Mumbai. Reuters

In a bid to settle all pending claims, Kingfisher Airlines chairman Vijay Mallya has reportedly reached out to lenders offering to pay Rs 2000 crore — a little over a fourth of the Rs 7,000 crore he owes banks — senior bank executives have told The Financial Express. The offer, however, was turned down by the consortium of banks – headed by SBI.

While banks have been making efforts to recover the amount due, the Enforcement Directorate, on its part, has already launched its investigation into Mallya’s finances. “We cannot accept such a small amount and have rejected the proposal,” one of the banking executives told FE.

On his part, Mallya has claimed that he and his companies are being labeled wilful defaulters only on “technical grounds”.

The State Bank of India had alleged that funds were diverted several times from Kingfisher Airlines to various UB Group companies and other firms. It said as much in an August 2014 notice sent to Mallya, Kingfisher, United Breweries, and its directors, and filed in the Bombay High Court. The notice also alleged that United Breweries (Holdings), the parent company, had been “deliberately avoiding payment to lenders”.

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The SBI notice was based on the findings of a forensic audit of Kingfisher Airlines. However, Mallya has claimed that all inquiries have failed to find any evidence of misappropriation of funds by him and Kingfisher Airlines. He and United Breweries have challenged the SBI order, and the case is now pending in the Bombay High Court. Apart from SBI, United Bank of India and Punjab National Bank have declared Kingfisher and Mallya wilful defaulters.

The 60-year-old liquor baron left the country days before banks approached the courts to seek orders restraining him from going abroad.

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The government told the Supreme Court that Mallya had left India on March 2 following which the bench issued notice to him and sought his response within two weeks on pleas filed by a consortium of banks seeking direction for freezing his passport and his presence before the apex court.

Mallya’s Kingfisher is among the top five wilful defaulters in the country. Others are Winsome Diamonds and Jewellery, Zoom Developers, Suryavinayak Industries and Deccan Chronicle Holdings. Wilful defaulters owe state-owned banks at least Rs 64,335 crore, according to a February 2016 report of the Standing Committee on Finance. That is about 21 per cent of the total non-performing assets or bad loans of Rs 3.06 lakh crore. At the end of September 2015, State Bank of India had the most wilful defaulters — 1,160 — who owed it Rs 11,700 crore. Punjab National Bank had 904 wilful defaulters, who owed it Rs 10,869 crore at the end of December 2015.

First published on: 30-03-2016 at 08:39:50 am
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