Let Vijay Mallya repay his debts
The banks’ main concern should be the bad loans on their books
On Thursday, fugitive billionaire Vijay Mallya, currently contesting India’s successful extradition bid (he is in London) in British courts, sent a message to Prime Minister Narendra Modi on Twitter, offering to settle his dues to banks. “I respectfully ask why the Prime Minister is not instructing his banks to take the money I have put on the table so he can at least claim credit for full recovery of public funds lent to Kingfisher,” he said in a series of tweets. Mr Mallya’s company, Kingfisher Airlines, defaulted on loans worth around
~9000 crore to a consortium of Indian banks (led by State-owned State Bank of India), and he fled the country just before a Bengaluru debt court ordered action against him.
The purpose of that litigation was to recover the money and Mr Mallya, who seemed disinclined to pay up then, has said repeatedly, as he did on Thursday, that he has, since, offered to pay the money back. Specifically, Mr Mallya claims he has offered to settle through a plea to the Karnataka High Court and that the Debt Recovery Tribunal has already attached assets of his, worth ~13,000 crore against the loans. This wasn’t a “frivolous” offer, he said on Thursday. If this is not the case, and there is no offer, or the value of assets attached isn’t enough to meet all of Mr Mallya’s debts, the government should say so. But if this is the case, the banks (or since the biggest among them are state-owned, the government) would do well to explain why his offer isn’t being taken. Is it for political reasons as Mr Mallya claims?
It is no one’s argument that a fugitive economic offender be allowed to get away. Mr Mallya has defaulted on loans, led the banks on a merry chase, and offered to settle under duress. It is the government’s duty to ensure that the money he owes banks be recovered, and that he is punished for his offences under extant laws. Sure, Mr Mallya has other cases against him related to his debts — by the Central Bureau of Investigation, which alleges he and some bank officials conspired to get his company the loans; and another by the Enforcement Directorate, alleging money laundering. While these cases originated from the defaults, they have taken on a life of their own, and if and when the charges are proven, Mr Mallya will face punishment. The primary concern of the banks, though, shouldn’t be that, but the bad loans on their books, and if Mr Mallya is offering to settle the full amount, they should jump at the opportunity.