Banks not impressed with Mallya's Rs4,000 cr offer
04 April 2016
The Rs4,000 crore partial settlement offer by Vijay Mallya to settle the debt of his defunct Kingfisher Airlines has left the State Bank of India-led consortium of lender banks unimpressed. The lenders have asked that the amount be doubled, according to unconfirmed reports today.
The consortium of 17 banks are trying to recover over Rs9,000 crore in dues stemming from loans taken by Kingfisher Airlines.
Last week, Mallya had proposed a Rs6,000 crore settlement out of which Rs2,000 crore was tied up in another lawsuit. Of the Rs4,000 crore offer proposed before the Supreme Court, Rs2,000 crore was to be paid upfront and the rest subject to conditions. Bankers have to respond to the proposal at the next Supreme Court hearing scheduled for 7 April.
Lenders have decided that they want a minimum of Rs4,900 crore to be paid up front, which is the principal loan amount. Further, they would demand an interest component as well. Most importantly, they want cash on the table and do not want to operate as a recovery agent.
Much of the proposal, bankers say, is filled with caveats, raising doubts if the assets included can actually help raise the stated amount.
It suggests that shares of companies pledged against loans be sold off. From this, banks will be able to get about Rs2,000 crore after paying off those who loaned money against the equity. It's not clear whether these are shares the banks are already claiming as part of guarantees provided by United Breweries Holdings.