Vijay Mallya faces CBI heat over loan fraud

The Central Bureau of Investigation (CBI) has registered a case against liquor baron Vijay Mallya (pictured), a senior official of his defunct Kingfisher Airlines and some officials of IDBI Bank for allegedly violating norms related to loans worth ~900 crore.

A CBI spokesperson said the “fraudulent act” led to huge losses for IDBI Bank. Sources said the bank had sanctioned the loan despite knowing the airline’s negative credit ratings and net worth.

On Saturday, the agency conducted raids at five locations (Mallya’s offices and residences) — three in Mumbai, one in Bengaluru and one in Goa. “Several incriminating documents found during the search are being scrutinised,” went a CBI statement.

A UB Group spokesperson said, “CBI officials visited UB Group premises in Bangalore, Goa and Mumbai in the course of an investigation regarding a loan facility availed by Kingfisher Airlines. The company cooperated with the officials and provided the necessary documents and will continue to offer cooperation.” The CBI has registered cases of criminal conspiracy and criminal misconduct by the persons involved. “A case has been registered against Vijay Mallya, director of Kingfisher Airlines; A Raghunathan, CFO (chief financial officer) of the firm; and other unknown officials of IDBI Bank for allegedly violating banking norms in the sanction and disbursement of credit limits of about ~900 crore,” said a CBI official.

The case is a part of the agency’s probe into rising non-performing assets of public sector banks.

In August, it had initiated a preliminary inquiry into the case. It had found there was “no need for the bank to take the exposure outside the consortium when already, other banks loans were being stressed”. At that time, the debt-ridden Kingfisher Airlines, which had stopped operations in October 2012, owed ~7,500 crore to a consortium of banks led by State Bank of India.