United Bank becomes first to declare Kingfisher a 'wilful defaulter'
01 September 2014
State-run United Bank of India today became the first lender to Kingfisher Airlines to declare the failed, debt-ridden airline and its promoter Vijay Mallya wilful defaulters, a move that has been threatened by several other lending banks for some time now.
"We have declared Vijay Mallya and three other directors of Kingfisher Airlines as wilful defaulters," United Bank of India executive director Deepak Narang told PTI.
Apart from liquor baron Mallya, the Grievance Redressal Committee (GRC) of the bank has declared directors Ravi Nedungadi, Anil Kumar Ganguly and Subash Gupte also as wilful defaulters.
With this declaration, these persons and the entity would not be able to borrow from the bank in future. They would also be barred from the board of any company. Criminal proceeding could also be initiated.
Narang said the decision of GRC would be conveyed to the finance ministry, the Reserve Bank of India, and the Securities & Exchange Board of India for further action.
The GRC meeting was convened today after a Calcutta High Court division bench last week allowed the bank to initiate the process of declaring Kingfisher and its officials wilful defaulters.
The GRC had asked the directors to be present before it, but none of them turned up. Instead, they sent a letter through their lawyer stating that they had filed a Public Interest Litigation (PIL) in the Supreme Court, and pending the judgement the bank should not proceed in this regard.
The Kolkata-based bank was the first PSU lender to initiate the process of declaring Vijay Mallya and three other directors of the grounded Kingfisher Airlines as wilful defaulters.
Subsequently, other banks such as State Bank of India, IDBI Bank and Punjab National Bank have also initiated the process of declaring KFA and its directors as wilful defaulters.
The bank's exposure to Kingfisher Airlines was around Rs350 crore. It was part of a consortium of lenders led by State Bank of India.
The consortium of 17 banks has an outstanding debt of about Rs4,022 crore from Kingfisher and outside the consortium, the bank gave about Rs60 crore loan for pre-delivery payment.
As part of the recovery process, banks in February last year decided to sell a portion of the collateral with them, including shares of its 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 Rs4,000 crore at the time it was pledged.