Chennai: Public-sector lender IDBI Bank has said it is planning to announce liquor baron Vijay Mallya's Kingfisher Airlines as a wilful defaulter.
The bank, which has a Rs 750-crore exposure to the grounded airline, also clarified it had not been questioned by the Central Bureau of Investigation, though the agency had sought some information from it.
IDBI Bank is the second bank that could list Kingfisher Airlines as a wilful defaulter. Kolkata-based United Bank of India has served a notice on the airline asking why it should not be named a wilful defaulter. Kingfisher Airlines has moved court against the notice. State-owned United Bank of India has a Rs 400-crore exposure to the airline.
The Reserve Bank of India defines wilful default as a situation where an entity does not pay lenders even though it has the capacity to do so, or when it does not use funds for the purpose a loan was given. If a borrower uses short-term working capital for long-term purposes, not in conformity with the terms of a loan, or deploys the funds for creation of assets other than those for which the loan was sanctioned, it is construed as diversion of funds.
16/08/14 TE Narasimhan/Business Standard
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The bank, which has a Rs 750-crore exposure to the grounded airline, also clarified it had not been questioned by the Central Bureau of Investigation, though the agency had sought some information from it.
IDBI Bank is the second bank that could list Kingfisher Airlines as a wilful defaulter. Kolkata-based United Bank of India has served a notice on the airline asking why it should not be named a wilful defaulter. Kingfisher Airlines has moved court against the notice. State-owned United Bank of India has a Rs 400-crore exposure to the airline.
The Reserve Bank of India defines wilful default as a situation where an entity does not pay lenders even though it has the capacity to do so, or when it does not use funds for the purpose a loan was given. If a borrower uses short-term working capital for long-term purposes, not in conformity with the terms of a loan, or deploys the funds for creation of assets other than those for which the loan was sanctioned, it is construed as diversion of funds.
16/08/14 TE Narasimhan/Business Standard
