Monday, September 1, 2014

United Bank of India declares Kingfisher Airlines wilful defaulter

B S Somasroy Chakraborty  |  Mumbai  
 Last Updated at 12:09 IS

The classification indicates the besieged airline has defaulted on repayments despite having the funds to do so
 The United Bank of India on Monday declared the groundedKingfisher Airlines and chairman Vijay Mallya a so-called 'wilful defaulter', making it the first bak to do so.
"We have declared Kingfisher Airlines, Vijay Mallya and a few other directors of the airline company as wilful defaulters," Deepak Narang, executive director of UBI, toldBusiness Standard.
The move comes after the Calcutta High Court last week dismissed the grounded airline company's plea against the bank. Kingfisher Airlines had moved the court after the bank identified it as a wilful defaulter and asked Mallya to appear before its grievance redressal panel.
UBI is one of the many lenders to Kingfisher Airlines and has an exposure of about Rs 400 crore to the embattled airline.

According to Reserve Bank of India (RBI) norms, a 'wilful default' is said to have occurred when an entity defaults in its payment obligations to lenders even if it has the capacity to pay and doesn’t use the funds for which the loan was availed, or diverts such funds. If the borrower uses short-term working capital funds for long-term purposes not in conformity with the terms of the sanction or deploys the borrowed funds for creation of assets other than those for which the loan was sanctioned, it is construed as diversion or siphoning of funds.
List of company Vijay Mallya is on board as chairman/director
Company NameDesignationYear Ended
Bayer Crop Sci.Chairman201403
Sanofi IndiaChairman201312
Mangalore Chem.Chairman201403
U B HoldingsChairman201303
United BreweriesChairman201303
KF AirlinesChairman & Managing Director201303
Shaw WallaceChairman200803
Shaw Wallace DisChairman200503
Shaw Wallace FinChairman200503
McDowell & CoChairman200003
Asian Age(South)Chairman200003
Source: Capitaline

Kingfisher Airlines is the leading company in a list of defaulters compiled by the finance ministry. The list also has Winsome Diamond (Rs 3,243 crore), Electrotherm India (Rs 2,653 crore), Corporate Power (Rs 2,487 crore) and Sterling Biotech (Rs 2,031 crore).

Separately, government-owned banks have been told to crack the whip on defaulters, and to recover dues from the top 50 as a first step. The ministry plans to make the rules regarding wilful defaulters more stringent, so that criminal charges can be pressed against such entities.

The ministry has proposed that a promoter or a board member of an entity classified as a wilful defaulter be barred from becoming a director in any other company. It had also been proposed that passports of such people be impounded, bankers said.

  • May, 2014: United Bank of India slaps wilful defaulter notice on Kingfisher Airlines, Vijay Mallya
  • July, 2014: Kingfisher Airlines moves Calcutta High Court challenging United Bank of India's notice
  • August, 2014: Calcutta High Court dismisses Kingfisher Airlines' appeal against United Bank of India
  • September, 2014: United Bank of India declares Kingfisher Airlines, its chairman Vijay Mallya and other directors as wilful defaulters for non-payment of dues estimated at around Rs 400 crore

No comments:

Post a Comment