CBI sources said the bank has failed to provide convincing answers on reasons to extend the loan to the crisis-ridden company.
"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," a senior CBI official probing the matter said.
The IDBI Bank Ltd Chairman could not be reached immediately for comments on the allegations.
The sources said senior officials of the management of Kingfisher Airlines Ltd, part of the UB group promoted by liquor baron Vijay Mallya, and IDBI Bank will be examined soon for explaining the reasons for extending the loan to the airlines ignoring its own internal report which has warned against such a move.
The debt-laden airlines has stopped operations since October 2012.
"We have not received any communication and are unaware of any such inquiry," Prakash Mirpuri, Vice President Corporate Communications of the UB Group, said while commenting on the development.
CBI sources said the agency has registered 27 inquiries and cases with regards to bad loans given by Public Sector Banks to various corporates, the latest being two cases registered against Bhushan Steel and Prakash Industries where CMD of Syndicate Bank was allegedly bribed by these companies.
The consortium of 17 banks had an outstanding of over Rs 7,000 crore on loans from Kingfisher with State Bank of India (SBI) having the highest exposure of Rs 1,600 crore.
Punjab National Bank (PNB) has outstanding dues of Rs 800 crore to Kingfisher, Bank of India Rs 650 crore and Bank of Baroda Rs 550 crore.
Among the others, United Bank of India has Rs 430 crore, Central Bank of India Rs 410 crore, UCO Bank Rs 320 crore, Corporation Bank Rs 310 crore, State Bank of Mysore, Rs 150 crore, Indian Overseas Bank Rs 140 crore, Federal Bank Rs 90 crore, Punjab and Sind Bank Rs 60 crore and Axis Bank Rs 50 crore.
SBI Chairman Arundhati Bhattacharya had earlier stated that the process of recovery of dues from Kingfisher Airlines is going on but there were legal challenges.
She had claimed that from the sale of Airlines' share, the bank was able to recover in the range of Rs 350 to Rs 400 crore.
This year All India Bank Employees Association has come up with the list of wilful defaulters in which Kingfisher Airlines is leading the tally with a with Rs 2,673 crore loan.
According to the Association, total NPAs in the public sector banks till September 2013 touched Rs 2.36 lakh crore.
Last year, CBI had initiated an inquiry into cases of defaulters of big loans from public sector banks. CBI chief Ranjit Sinha had said bulk of non-performing assets were connected to 30 defaulter accounts.
"A bulk of NPA is from top 30 accounts which is learnt to be running into thousands of crores. CBI has already initiated inquiry into some of the big defaulter accounts," Sinha said.
He said the banks were often reluctant to fix accountability of their staff, resulting in difference of opinion between them and the agency regarding the role of public servants.
India police launches initial probe into IDBI loan to Kingfisher
(Reuters) India's top crime fighting agency is investigating a loan made by state-run IDBI Bank Ltd to debt-laden Kingfisher Airlines worth 9.5 billion rupees ($155.38 million), a police spokeswoman said on Saturday.
The Central Bureau of Investigation (CBI) is looking into why the loan was approved when the airline has a negative net worth and a negative credit rating, Kanchan Prasad said.
"The CBI has registered a preliminary inquiry to inquire into the role of IDBI and Kingfisher Airlines," she said.
"There was no need for the bank to take the exposure outside the consortium when already other banks' loans were getting stressed."
A preliminary inquiry is usually the first step before a formal case is filed.
Kingfisher Airlines, controlled by liquor baron Vijay Mallya, has not flown in almost two years and owes about $1 billion to a consortium of mostly state-run banks, and hundreds of millions of dollars more to airports, tax authorities and others.
IDBI did not respond to requests for comment.
Prakash Mirpuri, a spokesman for UB Group, Kingfisher's controlling shareholder, said: "We have not received any communication and are unaware of any such inquiry."
Two-thirds of India's bank assets are controlled by state-run banks, which in turn account for three-quarters of the sector's bad loans.
Last week, CBI arrested Sudhir Kumar Jain, the chairman of state-run Syndicate Bank Ltd over allegations that he was seeking bribes to favour debtors.
(1 US dollar = 61.1400 Indian rupee)