Exclusive: Don’t know facts of Vijay Mallya’s case… it's for banks to take action, says Chidambaram

P Chidambaram, former finance minister with the Congress-led United Progressive Alliance (UPA) government on Monday sought to distance from the ongoing investigations into liquor baron Vijay Mallya and banks’ fight to get back about Rs 9,000 crore lent to Mallya’s now-defunct airline Kingfisher Airline. “I don’t know the facts of Mr Mallya’s case,” Chidambaram said in an exclusive interview to Firstpost on the sidelines of the launch of his book Standing Guard: A year in Opposition. [caption id=“attachment_2674682” align=“alignleft” width=“380”] ![Former finance minister P Chidambaram](https://images.firstpost.com/wp-content/uploads/2016/03/chidu-FP-video.jpg) Former finance minister P Chidambaram[/caption] “…In some cases he (Mallya) is a wilful defaulter, in some cases he has been a victim of economic downturn. Those are not matters where I can judge without full information,” Chidambaram said. “All I know is that he (Mallya) had defaults with the service tax department and the income tax department. Some 20 banks have lent to him. It is for the banks to take appropriate action,” Chidambaram said. A clutch of banks, including the country’s largest lender, State Bank of India (SBI), are struggling to recover the money lent to Mallya, even as the industrialist has left the country on 2 March raising concerns among banks. The Enforcement Directorate has summoned Mallya on 18 March in connection with a loan default case, the Supreme Court has issued a show cause notice on him on banks’ petition and a Hyderabad Court has issued a non-bailable warrant against Mallya. That apart, the cases against him set to be heard later this month in Bangalore Debt Recovery Tribunal (DRT) and there are investigations currently on by agencies including the Central Bureau of Investigation (CBI) related to his loan defaults to various Indian banks. In an interview to the Sunday Guardian on 12 March, Mallya reemphasised that he is not an absconder, he respects the Indian law and he left the country on a personal visit. Further, Mallya, said he has the best intentions and explained how loan defaults are part of any businesses. But, banks do not seem to be convinced on his assurance. Don’t blame UPA for bad loans Chidambaram said it is not correct to blame the Congress-led UPA government for the current mess in the banking sector. “Governments have not lent the money, banks have lent money. Banks have chairmen and boards of directors. They have RBI who is a regulator. They have statutory auditors appointed by the RBI. How do you blame the government for that?” Chidambaram said. Further, Chidambaram cited the high NPAs the banking sector faced during 2002-03. “Now, who was the prime minster that time? Mr Vajpayee. Nobody says Mr Vajpayee asked the banks to give the loan.” The former FM’s comments are coming at a time when the Indian banking industry is facing a big bad loan crisis. Total stressed assets in the banking industry currently stand at Rs 8 lakh crore, which includes Rs 4 lakh crore gross NPAs and the rest restructured loans. The RBI has given a deadline of March 2017 for the banks to clean-up their balance sheets. Chidambaram said NPAs are natural in the banking industry and the problem gets bigger in an economic downturn. “NPAs always have been always been there. As long as there is an economy, there is a banking system, there will be NPAs. In an economic slowdown, there will be NPAs. The point I’m making is there should be distinction between wilful defaulters and victims of economic slowdown. If you take action against wilful defaulters, that is perfectly right. Banks and governments must understand that many accounts have become NPAs because of economic downturn." Asked about the delay the banks face in the recovery process on account of the judicial process, Chidambaram said judiciary should leave the problem of bad loans to the government and the RBI to deal with. “I don’t think there are judicial standards by which judiciary can sort out the industry wide problem. If steel accounts become NPAs that is because of global downturn. How does a judiciary sort it out? There is a government; there is a regulator; and there are well laid down guidelines to deal with NPAs. I think the judiciary should leave it to the government and RBI to deal with the NPA problem, rather than finding a judicial solution,” Chidambaram said.

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Exclusive: Don’t know facts of Vijay Mallya’s case… it's for banks to take action, says Chidambaram

Asked about the delay the banks face in the recovery process on account of the judicial process, Chidambaram said judiciary should leave the problem of bad loans to the government and the RBI to deal with.

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