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SBI to approach CBI against Kingfisher over loan default

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After being declared wilful defaulter by United Bank of India, liquor baron Vijay Mallya faces more trouble.

The State Bank of India (SBI) may also soon approach the Central Bureau of Investigation (CBI) for investigating the alleged criminality involved in default of Rs 6,500 crore loan given to it by an SBI-led consortium, according to government officials.

The government is also mulling the bank consortium taking over the management of Kingfisher Airlines.

The government is also rolling up its sleeves to ensure that Mallya is ostracised from the country's financial system and will see to it that no bank grants any loan to Vijay Mallya and all the companies where he is a director.

The companies which have other promoter group members of Kingfisher Airlines on their board will also not be given any further loans.

A senior official said, "The tendency to open accounts in banks which are not part of the consortium has to be curbed. Kingfisher Airlines opened an account in a private bank, which had a balance of Rs 7.5 crore. The revenue from operations was being deposited in that account. If the company had money in another account, where is the question of inability to pay? Is it not a wilful default?"

Ministry of Finance will also approach the Reserve Bank of India (RBI) to address the issue of corporates resorting to opening of current account in a different bank, and depositing revenue from operations in it, rather than in the bank from where they have taken loans. The ministry has unearthed several such instances.

A source in the finance ministry confirmed that SBI is preparing to approach the investigating agency, without pegging a deadline to it, especially after the bank is now armed with a forensic audit on the Kingfisher Airlines account conducted by independent auditor EY.

The audit found instances of diversion of funds by Kingfisher Airlines. SBI in its response to queries from dna, said, "The audit report is being examined by the consortium of banks, all appropriate actions are being initiated."

The government is considering an option of the bank consortium taking over the management of the Kingfisher Airlines. "The two options before us are sale of assets of the company or taking over the management of the company. The second option is more preferable as the first one involves intricate issues such as labour, valuation, etc. Also, the chances of the recovery are better in this option," said the official.

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