Mallya’s .₹ 4kcr Of­fer Doesn’t In­ter­est Banks

17-mem­ber group wants dou­ble, .₹ 4,900 cr up­front plus in­ter­est

The Economic Times - - Front Page - San­gita.Me­hta @times­group.com

Mum­bai: Vi­jay Mallya needs to dou­ble the set­tle­ment of­fer he’s made to the17-lender group that’s seek­ing re­pay­ment of more than .₹ 9,000 crore in dues stem­ming from loans made to King­fisher Air­lines, the grounded car­rier founded by him.

The .₹ 4,000-crore of­fer pre­sented in the Supreme Court last week isn’t good enough in the view of the banks, said two peo­ple familiar with dis­cus­sions among lenders on Satur­day. The con­fi­den­tial pro­posal in­cluded pay­ment of .₹ 2,000 crore by Septem­ber and the rest sub­ject to con­di­tions. The bankers have to re­spond to the pro­posal at the next Supreme Court hear­ing sched­uled for April 7.

“Lenders have de­cided that they want a min­i­mum of .₹ 4,900 crore to be paid up­front, which is the prin­ci­pal loan amount. Fur­ther, they would de­mand in­ter­est com­po­nent as well,” said one of those cited above. ₹ ₹

Bankers are pro­ceed­ing on mul­ti­ple fronts, in­clud­ing try­ing to dis­pose of as­sets that Mallya had pledged to re­cover dues

“Most im­por­tantly, we also want cash on the ta­ble and we do not want to op­er­ate as their re­cov­ery agent,’’ said the per­son.

Much of the pro­posal is strewn with caveats, rais­ing doubts about whether the as­sets will ac­tu­ally yield the amounts stated, said the bankers, who didn’t want to be named. It sug­gests that shares of com­pa­nies pledged against loans be sold off. From this, banks will be able to get about .₹ 2,000 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 Ltd.

SBI heads the group of 17 lenders fight­ing more than 20 cases in var­i­ous courts and debt re­cov­ery tri­bunals across the coun­try af­ter King­fisher Air­lines col­lapsed in 2012 ow­ing about .₹ 7,000 crore. Banks have come un­der pres­sure to prove they are ac­tively try­ing to re­cover loans amid pub­lic anger and are tight­en­ing the screws on Mallya, who’s cur­rently said to be in the UK af­ter hav­ing left the coun­try last month. The banks have sought his re­turn to In­dia as has the En­force­ment Direc­torate, which wants to ques­tion him over ac­cu­sa­tions of money laun­der­ing. It has asked Mallya to present him­self on April 9 af­ter hav­ing failed to ap­pear on April 2. The CBI is mean­while look­ing into whether bankers com­pro­mised on lend­ing norms while re­struc­tur­ing the King­fisher Air­lines loans.

Mallya has con­sis­tently de­fended him­self against ac­cu­sa­tions of wrong­do­ing and said he’s the vic­tim of a me­dia cam­paign. Bankers are pro­ceed­ing on mul­ti­ple fronts, in­clud­ing try­ing to dis­pose of as­sets that Mallya had pledged to re­cover dues. A bid to sell the air­line’s head­quar­ters in Mum­bai failed, with ex­perts say­ing the re­serve price was too high.

They re­cently put on sale the King­fisher logo, which in­cludes the rep­re­sen­ta­tion of the bird that is sup­pos­edly the most valu­able item among the as­sets.

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