The UPA government led by Dr Manmohan Singh has come under pressure after letters from absconding businessman Vijay Mallya were cited in reports. The correspondence between UPA’s top leaders and Mallya revealed that favours were sought regarding disbursal of loans. According to TV reports, Mallya wrote to former Finance Minister P. Chidambaram and former PM Manmohan Singh and sought to expedite loans from banks and a requested fuel supply credit for 60 days. While the political weight will be in Congress, the biggest party in UPA government, but as it is BJP who is in the Centre, it needs to take some strong actions.
While the Kingfisher Airlines was functioning for 8 years, it never made any profit, which further raises the question on banks, especially because a strong political support appear to be needed for this scale of backing. Last week, CBI had arrested former IDBI chairman and former CFO of now-defunct Kingfisher Airlines A Raghunathan Yogesh Aggarwal in Vijay Mallya loan default case. Four executives of Kingfisher Airlines and three more former executives of IDBI Bank were also arrested by CBI. Mallya at the moment is believed to be in England and the government has been making many attempts to bring the businessman back by court summons, cancelling his passport and pushing for deportation, but in vain. Even the selling of Kingfisher properties is not getting the government any considerable amount to recover money. Last week, however, after a 3-year-long trial, the Debt Recovery Tribunal allowed a consortium of 17 banks to recover from Mallya’s companies, the outstanding dues of more than Rs. 6,200 crore along with interest related to the KFA’s operations.
While, there appears to be a deep-rooted involvement of politicians and bankers alike to make such large scale violations, and there needs to be a thorough independent investigation for the same; it is also imperative that the current government take some steps on how banks function. Meanwhile, Mallya has been absconding for a long time now and has been defending his case by claiming to be a media trial victim. But now that, in a rare case, the banks, the judiciary and the government are hell bent on chasing him, it is crucial to bring him back and set an example for other defaulters, especially wilful defaulters, and end the prejudice about the passive approach towards the well-heeled.
Tearing apart a banker and borrower nexus is highly necessary to ensure the safeguard of exchequer’s money in the same way as acting against corrupt leaders is. Yet a timely and transparent system is important to make sure that bankers don’t turn apprehensive about extending credit at small hints of risk.