Shares in companies related to Vijay Mallya have come under pressure since Monday when state-run United Bank of India declared him wilful defaulter number 408 for not paying a loan of a Rs. 350 crore given to Kingfisher Airlines. UBI will now report Mr Mallya to 16 other banks to which his Kingfisher Airlines owes more than Rs. 6,000 crore.
Mr Mallya today said, "We disagree with the findings of the Grievance Redressal Committee before which we had no opportunity to appear and we shall pursue all available legal remedies." (Read full story)
His statement comes days after the Supreme Court refused to entertain a petition filed by Kingfisher Airlines against United Bank's decision. On Tuesday, the court dismissed Kingfisher's objection saying the order declaring Mr Mallya a wilful defaulter had already been passed. However, the court left it open to Kingfisher to move any court against UBI's order.
Meanwhile, other lenders are mounting pressure on the liquor baron to recover their dues. By Friday, Mr Mallya has to appear before IDBI Bank, which is struggling to recover Rs. 750 crore from Kingfisher Airlines. (Read the full story here)
IDBI Bank is considering declaring Mallya a "wilful defaulter", the bank's chairman MS Raghavan told Reuters yesterday.
State Bank of India and Punjab National Bank are among other big lenders who have given loan to the grounded carrier, which has not flown since October 2012.
According to the Reserve Bank, a wilful defaulter in one who as a borrower has the ability to pay, but is unwilling to pay. A wilful default can also happen if the company/person has diverted loan proceeds for other than their initially stated use or has overstated profits to obtain a loan, the RBI says.
Banks follow an elaborate procedure, laid down by the Reserve Bank of India, before declaring somebody as a wilful defaulter. Such cases are looked into by a committee of higher functionaries headed by the executive director and two GMs/DGMs of the bank.
In case of United Bank, a Grievance Redressal Committee headed by executive director Deepak Narang was formed to investigate the case.
The wilful defaulter tag is not only a naming and shaming exercise, but could also entail significant criminal and financial liabilities for Mr Mallya. The central bank has stipulated strict penal measures for wilful defaulters, so in the coming days Mr Mallya could face some anxious moments.
Here are the measures recommended for wilful defaulters by the Reserve Bank of India,
1) Banks can write to market regulator Securities and Exchange Board of India (Sebi) to debar a wilful defaulter from accessing the securities market.
2) Lenders do not grant additional facilities to wilful defaulters. In case of fraud, such persons can be debarred from institutional finance for floating new ventures for 5 years.
3) Banks can initiate legal proceedings against wilful defaulters to recover dues. Criminal proceedings can be initiated, if necessary.
4) Banks and financial institutions can adopt a proactive approach for a change of management of the wilfully defaulting borrower unit. Mr Mallya may have to relinquish his board seat in a number of his companies because they will not be eligible for fundraising. Besides heading Kingfisher Airlines and his UB Group, Mr Mallya is chairman of United Breweries and United Spirits which is majority-owned by Diageo.
5) Banks will not do business with any company where a person declared to be a wilful defaulter is a director on the board.
At a time when Indian stock markets are hitting successive record highs, shares in Mr Mallya's companies are floundering. On Thursday, UB Holdings shares fell for a fourth straight session. The stock has lost over 14 per cent since September 1, when Mr Mallya was declared a wilful defaulter. Kingfisher Airlines, which has now become a penny stock, has shed over 8 per cent since Monday.
Shares in Mr Mallya's liquor companies - United Breweries and United Spirits - have managed to stay flat despite the turbulence over the last four days.Source: http://profit.ndtv.com/
Mr Mallya today said, "We disagree with the findings of the Grievance Redressal Committee before which we had no opportunity to appear and we shall pursue all available legal remedies." (Read full story)
His statement comes days after the Supreme Court refused to entertain a petition filed by Kingfisher Airlines against United Bank's decision. On Tuesday, the court dismissed Kingfisher's objection saying the order declaring Mr Mallya a wilful defaulter had already been passed. However, the court left it open to Kingfisher to move any court against UBI's order.
Meanwhile, other lenders are mounting pressure on the liquor baron to recover their dues. By Friday, Mr Mallya has to appear before IDBI Bank, which is struggling to recover Rs. 750 crore from Kingfisher Airlines. (Read the full story here)
IDBI Bank is considering declaring Mallya a "wilful defaulter", the bank's chairman MS Raghavan told Reuters yesterday.
State Bank of India and Punjab National Bank are among other big lenders who have given loan to the grounded carrier, which has not flown since October 2012.
According to the Reserve Bank, a wilful defaulter in one who as a borrower has the ability to pay, but is unwilling to pay. A wilful default can also happen if the company/person has diverted loan proceeds for other than their initially stated use or has overstated profits to obtain a loan, the RBI says.
Banks follow an elaborate procedure, laid down by the Reserve Bank of India, before declaring somebody as a wilful defaulter. Such cases are looked into by a committee of higher functionaries headed by the executive director and two GMs/DGMs of the bank.
In case of United Bank, a Grievance Redressal Committee headed by executive director Deepak Narang was formed to investigate the case.
The wilful defaulter tag is not only a naming and shaming exercise, but could also entail significant criminal and financial liabilities for Mr Mallya. The central bank has stipulated strict penal measures for wilful defaulters, so in the coming days Mr Mallya could face some anxious moments.
Here are the measures recommended for wilful defaulters by the Reserve Bank of India,
1) Banks can write to market regulator Securities and Exchange Board of India (Sebi) to debar a wilful defaulter from accessing the securities market.
2) Lenders do not grant additional facilities to wilful defaulters. In case of fraud, such persons can be debarred from institutional finance for floating new ventures for 5 years.
3) Banks can initiate legal proceedings against wilful defaulters to recover dues. Criminal proceedings can be initiated, if necessary.
4) Banks and financial institutions can adopt a proactive approach for a change of management of the wilfully defaulting borrower unit. Mr Mallya may have to relinquish his board seat in a number of his companies because they will not be eligible for fundraising. Besides heading Kingfisher Airlines and his UB Group, Mr Mallya is chairman of United Breweries and United Spirits which is majority-owned by Diageo.
5) Banks will not do business with any company where a person declared to be a wilful defaulter is a director on the board.
At a time when Indian stock markets are hitting successive record highs, shares in Mr Mallya's companies are floundering. On Thursday, UB Holdings shares fell for a fourth straight session. The stock has lost over 14 per cent since September 1, when Mr Mallya was declared a wilful defaulter. Kingfisher Airlines, which has now become a penny stock, has shed over 8 per cent since Monday.
Shares in Mr Mallya's liquor companies - United Breweries and United Spirits - have managed to stay flat despite the turbulence over the last four days.Source: http://profit.ndtv.com/
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