IDBI chairman hastily sanctioned ₹350 crore to Vijay Mallya: ED

NEW DELHI: Two initial tranches of loan worth Rs 350 crore were hastily disbursed by IDBI bank to Kingfisher Airlines after a “holiday” meeting between liquor baron Vijay Mallya and the then bank CMD as both organisations “criminally conspired” to clear the entire deal despite weak financials of the airline, the ED has said.

The total loan sanctioned and disbursed by IDBI was Rs 860.92 crore.

The agency, probing the case for money laundering charges, has said its investigation found that the processes deployed to structure and re-structure the loan by the bank to the now-defunct airline was planned to be defrauded and that Mallya and Kingfisher Airlines (KFA) had “no intent” to repay it.

“PMLA investigation indicates that the marketable value and quality of the collateral security offered by Ms KAL (KFA) and its promoters was not assessed. There is a complete lack of due diligence on the part of the bank coupled with the fact that undue haste was shown while disbursing the initial two tranches of loan amounting to Rs 350 crore.

“It is apparent that the said loans were disbursed post meeting of Mallya with the then CMD (Yogesh Aggarwal) of the bank on a holiday. It does not need an eagles’ eye to decipher the cause of immediate disbursement of the loan amount of Rs 150 crore on October 7, 2009 and Rs 200 crore on November 4, 2009,” the Enforcement Directorate (ED) probe report, accessed by PTI, said.

The CBI recently arrested Aggarwal and eight others in this case.

The report added this specific transaction, where “substantial amounts” were sanctioned to KFA, in an ad-hoc basis and without due diligence points to the “existence of a deep rooted criminal conspiracy between the bank officials and the promoters of KAL (KFA)”.