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  1. Vijay Mallya defaults on State Bank of India notice for appearance

Vijay Mallya defaults on State Bank of India notice for appearance

In an attempt to speed up the wilful defaulter classification for Kingfisher Airlines, State Bank of India (SBI) has written to Vijay Mallya asking him to appear before it for a personal hearing.

By: | Mumbai | Published: June 12, 2015 12:55 AM
vijay mallya sbi notice

Apart from SBI, United Bank of India and Punjab National Bank have declared Vijay Mallya a wilful defaulter for non-payment of dues. (PTI)

In an attempt to speed up the wilful defaulter classification for Kingfisher Airlines, State Bank of India (SBI) has written to Vijay Mallya asking him to appear before it for a personal hearing. Sources told FE that after the wilful defaulter notice was issued to Kingfisher on August 19 last year, the company put forth objections to the notice but Mallya had not appeared for a hearing.

According to Reserve Bank of India (RBI) guidelines, a borrower can be classified a wilful defaulter after a personal hearing before a lenders’ committee comprising an executive director and two other senior officers of the rank of general manager or deputy general manager.

“We asked him to come, but they wanted legal representation and the presence of advocates. We refused saying that was not part of the RBI instructions,” the source said. He added that Kingfisher Airlines had moved the Bombay High Court four months ago with a writ petition against SBI’s decision to not allow legal representation. “Unless the hearing takes place, we will not be able to classify the borrower as wilful defaulter,” the source added.

A consortium of 17 banks is yet to recover about R7,000 crore from Kingfisher; SBI’s share is the largest at around Rs 1,600 crore. In a statement to the BSE in September last year, Kingfisher Airlines had said that it requested SBI to disclose all documents, materials, details and evidence that may have been referred to or relied upon by SBI in support of the allegations of the notice.

Apart from SBI, United Bank of India and Punjab National Bank have declared Vijay Mallya a wilful defaulter for non-payment of dues. The airline is already engaged in legal battles with the lenders and other financial institutions and in May, an SBI-led consortium moved the Supreme Court claiming both Mallya and the defunct airline were jointly and severally liable to pay total outstanding dues.

According to RBI guidelines, a borrower is termed a wilful defaulter if he has defaulted in meeting the repayment obligations to the lender even when he has the capacity to repay, or has not utilised the money from the lender for the specific purposes for which finance was availed of but has diverted the funds for other purposes.

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