Sunday, August 30, 2020

YES Bank tightens noose around Jet Airways founder Naresh Goyal

Yes Bank, under a new management, has turned up the heat on Naresh Goyal, the founder of Jet Airways.
The private sector lender has initiated the process to categorise Goyal and his wife Anita as `wilful defaulters’. A ‘wilful defaulter’ tag by banks may stain the reputation of persons and restrict their ability to borrow and hold board positions in companies.
 Yes Bank recently communicated this to the members of the promoter family of Jet Airways --- India’s oldest private sector airline which stopped operations in 2019 after it ran out of cash. Goyals, it’s believed, have responsed to Yes, indicating that they were not involved in the borrowings by the airline, sources told ET. Responding to a text message from ET, Yes Bank CEO Prashant Kumar said the bank does not comment on specic accounts.
 The grounded airline owes more than Rs8500 crore to lenders. Yes, with exposure of Rs 550 crore to Jet, belongs to the consortium of lenders led by State Bank ofIndia (SBI). In June 2019, the country’s bankruptcy court admitted an insolvency petition led by SBI, paving the way for a resolution process for the troubled company. 
"Categorising someone as 'wilful defaulter' is largely an administrative decision by banks and not a direct part of statute. However, it receives indirect statutory support as directions on wilful defaulter were issued under the Banking Regulation Act. It depends on whether a company despite having a surplus chose to use the money for some other purpose instead of repaying lenders..It may not always be a fair stand but that is the settled position in India. Besides other restrictions, a promoter or shareholder who is nally declared as wilful defaulter by banks cannot oer or participate in any resolution plan for the borrowing company," said M.R.Umarji, former ED, Reserve bank of India. However, saddled with claims from operational creditors and employees, bankers have almost lost hope in revival of the company. 30/08/20 Sugta Ghosh/Economic Times
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