The arrest of a few former IDBI bank officials early this week by the Central Bureau of Investigation (CBI) marks a new chapter in the Vijay Mallya-Kingfisher loan case. Those arrested include former chairman, Yogesh Aggarwal, four other ex-officials of IDBI Bank including ex-Deputy Managing Director B K Batra and former Kingfisher CFO, A Raghunathan.
Going by reports that quote CBI sources, the arrests were made after CBI found out that the loan was allegedly sanctioned in violation of norms regarding credit limits and though there was no need for the bank to take the exposure outside the consortium. "It was first exposure to the bank. There was no need for the bank to take the exposure outside the consortium when already other loans were getting stressed," the PTI quoted a senior CBI official involved in the probe.
The investigators, who have acted late, are finally waking up to find the root of the Rs 9,000 crore loan default case that involves some 17 banks. This happened only after media took up the issue in a major way after the liquor-baron (who offered personal guarantee to this loan) left the country on 2 March last year. The industrialist is currently believed to be in the UK. The Narendra-Modi government has made several attempts to bring Mallya back by cancelling his passport and pushing for deportation but didn’t find success yet.
Despite this, and multiple court summons, the liquor King hasn’t yet returned to the country. Banks are currently struggling to recover money by selling Kingfisher assets.
Much as the role of the bankers needs to be probed in the context of the violations of lending norms and corruption, the likely involvement of the political dispensation during the whole episode (Kingfisher loan was first termed as NPA in early 2012) too needs to be probed, especially in the context of reports (read here) that the UPA-government, particularly the PMO and the ministry of finance, favored Mallya and Kingfisher airlines.
CNN-News18 accesses emails, letters from Mallya to Manmohan Singh which refer to then-Finance Minister Chidambaram.
CNN-News18 accesses emails, letters from Mallya to Manmohan Singh which refer to then-Finance Minister Chidambaramhttps://t.co/IPHdd7w4nE
— News18 (@CNNnews18) January 28, 2017
CNN-news 18, citing documents it accessed, said in its report that “the office of former prime minister, Manmohan Singh may have taken a special interest to try and keep afloat Vijay Mallya's ailing Kingfisher Airlines. Mallya, on the other hand, said that he “begged for help” in terms of policy changes but not for government’s intervention for bank loan.
I begged for help.Not for loans but policy changes-declared goods status for fuel,flat rate of state sales tax instead of ad Valorem,FDI etc
— Vijay Mallya (@TheVijayMallya) January 28, 2017
Only a through, independent investigation will reveal whether the charges are true. The fact is Kingfisher Airlines, which never made profit in its eight year old life, continued to enjoy the support of banks even when a crisis was brewing inside. Banks continued to offer fresh assistance. This would not have been possible with political backing to the billionaire and silent missives to banks. But, this is something that warrants deeper investigations.
It’s almost a year since Mallya left the country. Since then, the liquor baron has been highly defiant and has defended his case saying he is being a victim of the media trial and unfair treatment by the government and investigators.
In an April, 2016 interview to Financial Times (read here), Mallya said “by taking my passport or arresting me, they are not getting any money.” The billionaire has also contested the Rs 9,000 crore figure.
In the hindsight, Mallya has smartly used the legal system to his advantage to delay the loan recovery including forcing Kolkata-based United Bank of India to reverse its decision (to tag Mallya as wilful defaulter) getting a favourable court verdict on technical ground. Remember, the court ruled in favour of Mallya citing that instead of having three members, the grievance redressal committee of the bank had four members.
There are not too many parallels to the Mallya-Kingfisher case in India’s banking sector history. This is one of the first cases, where banks, government and judiciary have acted together to chase one individual who have guaranteed a Rs 9,000 crore loan. For that same reason, bringing Mallya and Kingfisher before the law is extremely critical to send out a strong signal to the other large defaulters, especially ‘wilful defaulters’. Not just bankers, the role of politicians in the Kingfisher episode needs to be probed thoroughly. If the UPA-government, the PMO and FM, went out of the way to help Mallya, they have a lot of explaining to do.
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Updated Date: Jan 28, 2017 14:21:28 IST