Bank rejecting Vijay Mallya’s Rs 4,000 cr offer shows they have guts finally


The choice of a 17-member bank consortium, led by means of country bank of India (SBI), to reject an offer by way of Kingfisher leader Vijay Mallya to pay Rs 4,000 crore to banks and insist for the liquor baron to seem in man or woman for similarly negotiations indicates that India’s nation-run banks have ultimately learned the lesson inside the tough way. They have got started to reveal the center to tackle crony promoters.
Mallya’s proposal to banks exhibited the characteristics of a generous gift from an emperor to his subjects, rather than from loan defaulter to the financial institution. When Mallya is because of pay Rs nine,000 crore to a grasp of banks, the liquor-baron offered Rs four,000 crore and further Rs 2,000 crore on the settlement of a prison case after negotiating through a video-convention from the suburbs of London. This is not how a bank in India usually cope with a defaulter who has done not pay back his mortgage for more than four-years.

Vijay Mallya and Arundhati Bhattacharya
Vijay Mallya and Arundhati BhattacharyaVijay Mallya and Arundhati Bhattacharya
additionally, Mallya deserved no unique privilege. He is some distance from a sincere borrower, who is going through a transient monetary issue. After all, the person is tagged as a wilful defaulter (someone who wouldn’t pay lower back to banks although he has the capability to achieve this) with the aid of two banks including SBI after the lenders carried out audits and discovered out instances of fund diversion and economic irregularities via Mallya.
The Kingfisher-Mallya case is specific from other banker-defaulter dealings considering a number of investigative companies, along with Enforcement Directorate, income Tax authorities and the principal Bureau of research for costs together with monetary fraud.
Real financial difficulties and industry issues form best a minor a part of the general motives that sooner or later resulted within the default of Kingfisher loan to banks. Banks have identified diversion of finances by way of the flamboyant industrialist to different activities that has nothing to do with initially supposed use of the money borrowed for Kingfisher airlines.
Besides, Mallya has by no means even once shown the willingness to pay off money to banks in these for years. Rather, he took the banking device for a journey the usage of the power of his prison crew and his connections inside the political, bureaucratic circles. Whilst former Kingfisher employees had been crying for his or her pending pay and plenty of Kingfisher shareholders lost a fortune in market, Mallya was flaunting his wealth throwing lavish events and in F1 rallies.
That isn’t the manner a sincere guy, in economic difficulty, behaves in such scenario, but, exhibited defiance and rude mindset that the ‘wealthy and effective’ can take the machine for granted. The equal mindset provoked the media to chase Mallya—the identical person who as soon as claimed “he could buy any journalist In India”.
There was and there’s no motive for banks to comply with settle for much less than half of the amount Mallya owes to them, while through felony recovery complaints, the lenders can recover the entire essential and interest quantity (which is growing every passing week).
Mallya nonetheless has fortune.
His shareholding in groups is worth over Rs 7000 crores. Mallya has palatial residences and top rate real estate properties throughout international. If Subarata Roy of Sahara can show the cause to sell his property to pop out of prison, there is no purpose why Mallya cannot do the same for no longer going to jail.


Greater seriously, Mallya is also combating a massive belief deficit with the creditors, shareholders, investigators and the courts. There has been no motive for banks to accept as true with his words. He is agreeing to repay after he turned into cornered from all sides and there may be no option left even to go back to his home usa. The industrialist has the whole thing at stake—his family legacy, his business empire and even his non-public freedom within the country of his start.
Greater than any of these elements, the biggest cause why banks shouldn’t settle for whatever less than the full quantity and prison action towards Mallya is that the cash at stake is public money. Banks gather deposits raised from public and lend the budget. Particularly, inside the Vijay Mallya case, it’s kingdom-run banks that have been taken for the experience by using Mallya.
Each hollow Mallya punches on the balance sheets of these banks needs to be crammed through the general taxpayer (authorities being the proprietor of those banks infuse capital in those banks each yr). The taxpayer shouldn’t be pressured to bail out cronies. There are numerous Mallyas available who’s watching the Kingfisher case and there is an inventory of Rs 400,000 crore horrific loans threatening the banking region (maximum of which can be from corporates).
Within the region of Mallya, had it been a not unusual man, who defaulted on his home or vehicle loan, a navy of financial institution workforce might have knocked at his door at the 91st day, to recover the cash. There is no reason why Mallya et al. must be handled in another way.