Mallya offers to settle dues, banks await more clarity
Mumbai: Embattled liquor baron Vijay Mallya today once again offered to settle his Rs 9,000 crore debt with lenders. In a series of tweets, Mallya said he was ready to negotiate a one-time settlement charge with the consortium of banks he owes on account of the failure of his airline business Kingfisher Airlines which has been grounded since 2012.
Mallya appeared to be offering an olive branch to banks when he said he was "ready to talk settlement on (a) fair basis".But the initial reaction from bankers was guarded. Banking sources who spoke to BTVi said it is impossible to respond to Mallya's tweets without knowing the quantum of the offer. "It is crucial to know how much the offer is improved over the previous offer of Rs 6,000 crores", said one banker on the condition of anonymity. Banks had previously shot down an offer of Rs 6,868 crore from Mallya to settle his dues in April of last year.
These sentiments were echoed by counsel to the consortium of banks, Senior Advocate SS Naganand who called the offer "hypothetical" until it was received in writing. "We are not in the business of social media. As a banking institution, we need a credible, written offer signed by him and delivered to the bank. If he gives a fair offer, the bank will consider it fairly", Naganand said in an exclusive interview to BTVi.
However, some bankers are hopeful that Mallya's latest statements may herald an improved offer on the table. "Mallya may be ready to attach his personal resources and improve the offer from last time", said one banker. Fear of backlash from investigative authorities continue to haunt Mallya's lenders following the arrests of former IDBI Bank Chairman Yogesh Aggarwal and 8 others in connection with Mallya's loan fraud case in January.
"Any new offer should go through an oversight committee so banks feel comfortable to settle without fear of backlash from the CBI", said one banker. "The previous offer of Rs 6,000 crore was good but banks rejected it fearing backlash. Banks cannot realise anything close to this amount from Mallya's assets alone." Indeed, the SBI-led consortium of banks has failed to attract bidders in their efforts to auction Mallya's Kingfisher House in Mumbai and Kingfisher Villa in Goa, despite lowering the reserve prices for the fourth and third time respectively.
Mallya's latest offer comes at a time when Finance Minister Arun Jaitley has initiated discussions with RBI officials to tackle the NPA situation. NPAs of 41 banks have increased 60% to Rs 7 lakh crore in the December 2016 quarter, compared to the same period in the previous year.
“Why have I been made the poster boy of loan defaulters?” questioned Senior Advocate C S Vaidyanathan on behalf of Mallya at a day-long hearing at the Supreme Court on Thursday. The lawyer pointed out that with banks sitting on NPAs of over Rs 7 lakh crore, Vijay Mallya's case is not unique and the liquor baron is being `targetted unfairly’ by the government.
In the meantime, the Karnataka High Court has ordered a bailable warrant be issued against Mallya through the diplomatic process, with the bail amount set at Rs 50 lakh for Mallya to appear before the court. Vijay Mallya has been residing in the UK since he left India on 2nd March last year.