SBI approached DRT, seeking action against Vijay Mallya

In the latest twist to the four year long saga of Kingfisher Airlines’ Rs 7000 crore default related to State Bank of India (SBI), which is a top state run lender, approached the Debt Recovery Tribunal (DRT) on Wednesday seeking action against UB Group promoter Vijay Mallya and to impound his passport for defaulting on loans, according to a media report.

SBI which heads the consortium of 17 lenders to the grounded Kingfisher Airlines, is seeking to bar promoter Vijay Mallya from leaving the country and sought to lay claim to his personal assets as well, in its bid to recover over Rs 7,000 crores of overdue loans from him. 

Mallya and Kingfisher Airlines owed Rs 7,800 crore to a consortium of 17 lenders led by State Bank, which had an exposure of over Rs 1,600 crore to the now defunct airline. Since January 2012, the loan was not serviced. SBI has moved four applications at the DRT, seeking the impounding of Mallya’s passport, getting him arrested, securing the lenders’ first right on the payout from Diageo, and getting full disclosure of his assets in the country and abroad. 

The immediate objective of the lenders moving the DRT is to secure a first right on the USD 75 million severance package that Mallya will be getting for quitting Diageo-owned United Spirits (USL) as its chairman last week.

Other lenders include Punjab National Bank, Bank of Baroda, Canara Bank, Bank of India, Central Bank of India, Federal Bank, UCO Bank and Dena Bank among others. Last year, SBI declared Mallya a wilful defaulter. Last month, Punjab National Bank had also declared him, his group holding company United Breweries Holdings and the long-defunct Kingfisher Airlines as wilful defaulters. 

As part of a deal, Diageo said it would pay USD 40 million immediately to Mallya with the balance being payable in equal instalments over the next five years. It will also absolve Mallya of all liabilities over alleged financial lapses in the company founded by his family.