Calcutta, May 29: The United Bank of India has identified Vijay Mallya-led Kingfisher Airlines and its directors as wilful defaulters and has shot off a letter to the liquor baron and other directors of the company asking them to explain their inability to repay the loans.
The move, a first among the lenders of the ailing airlines, could potentially put the company and its directors on the Reserve Bank of India’s blacklist of defaulters, barring it from obtaining any credit in the future.
The UBI is among the consortium of 17 banks — led by the State Bank of India — that is trying to recover dues of over Rs 7,500 crore from the airline. The bank has sought an explanation from the company over the non payment of over Rs 300 crore outstanding dues.
“A notice has been issued to Vijay Mallya and other directors of Kingfisher Airlines yesterday,” Deepak Narang, executive director of the United Bank of India, told The Telegraph. According to the bank, Mallya would have 15 days from receiving the letter to explain his position.
According to sources, such letters are usually sent to borrowers when they do not pay back their advances despite the ability to do so. The bank also looks into the end use of the advances to the company. Sources said the SBI, which has the maximum exposure of about Rs 1,600 crore, is also exploring the possibility of declaring the airline’s promoters as wilful defaulters.
The airline has been grounded since October 2012 after it was unable to pay its dues. The lenders to the airline had to make provisions for the bad loans, which had an adverse impact on their bottomlines.
Bank sources confirmed that the lenders had filed a winding-up petition of the airline in Karnataka High Court in December last year. The UBI, on its part, has been going tough on its defaulters after launching a strong recovery drive to trim the sudden and sharp rise in NPAs during the third quarter of 2013-14.
It has already filed a winding-up petition against REI Agro for non-payment of Rs. 224 crore in dues. The company is engaged in agro-based and other ancillary businesses.
Continuing its war on bad loans, UBI is aiming to trim its gross non-performing assets to around Rs. 5,500 crore by this fiscal-end, bringing it down by more than Rs. 1,600 crore through recovery and upgradation.
The troubled city-based bank’s gross NPAs stood at as high as Rs. 7,118 crore or 10.47 per cent of total advances at the end of the last financial year, even as it reduced its gross NPAs of Rs. 1,427 crore during the fourth quarter of 2013-14. The bank’s gross NPAs to advances during the third quarter of 2013-14 had jumped to 10.82 per cent
Narang said that the bank would continue to cut down on its stressed assets and reduce its gross NPA during 2014-15.