The flamboyant liquor baron, Vijay Mallya, once hailed as the King of Good Times and Indian version of Richard Branson, is being chased by almost every institution in the country — the banks, regulators and, finally, the judiciary — for the Rs 9,000 crores he owes to the lenders. How did Mallya fall to his current plight, where he is personally held accountable for the failure of the airline business Kingfisher Airlines and delayed repayment of loans? The answer lies in a decision forced on him by lenders in 2010 to give a second lease of life to the airline that was then on the brink of a collapse.
“Mallya had his back against the wall. Banks insisted him to offer personal guarantees for any further lending,” said a retired banker, who was previously with State Bank of India (SBI), on condition of anonymity.
“Otherwise, there was no reason why Mallya is personally held responsible for the repayment of the loan (Rs 9,000 crore now including the accrued interest amount). There are bigger stressed borrowers (companies) around,” the banker said, giving examples like Bhushan Steel and Winsome Diamonds.
The Kingfisher Airline, grounded in 2012, never made profit in its eight years of operations. When Mallya approached the group of lenders for further lending in 2010, there was serious differences of opinion among the group of senior bankers in SBI, and other banks in the consortium, on why should they lend to the airline again. But, the majority decision was to take the big risk again and lend to Mallya.
10/03/16 Dinesh Unnikrishnan/First Post
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“Mallya had his back against the wall. Banks insisted him to offer personal guarantees for any further lending,” said a retired banker, who was previously with State Bank of India (SBI), on condition of anonymity.
“Otherwise, there was no reason why Mallya is personally held responsible for the repayment of the loan (Rs 9,000 crore now including the accrued interest amount). There are bigger stressed borrowers (companies) around,” the banker said, giving examples like Bhushan Steel and Winsome Diamonds.
The Kingfisher Airline, grounded in 2012, never made profit in its eight years of operations. When Mallya approached the group of lenders for further lending in 2010, there was serious differences of opinion among the group of senior bankers in SBI, and other banks in the consortium, on why should they lend to the airline again. But, the majority decision was to take the big risk again and lend to Mallya.
10/03/16 Dinesh Unnikrishnan/First Post
