The CBI has alleged that an "intangible asset" in the form of Kingfisher brand valuation was accepted as security by the accused officers without considering whether it could be enforced as security in case of loan default.
The CBI has found that higher-rung IDBI Bank officials accused in the case did not seek valid securities while granting a corporate loan to the now-defunct airlines during its investigation into the Kingfisher Airlines-IDBI loan default case, in which Vijay Mallya is an accused.
According to the charge sheet filed by the CBI, lower rung officials of the bank had informed the accused bank officials that the airlines was ineligible for a loan since it had not deposited any security with the bank. Their opinion was disregarded by the accused while extending the loan to Kingfisher Airlines.
The CBI has alleged that an "intangible asset" in the form of Kingfisher brand valuation was accepted as security by the accused officers without considering whether it could be enforced as security in case of loan default.
"It is relevant to mention that the Kingfisher brand was valued at Rs 3,406 crore by M/s Grant Thornton in 2008. The brand valuation also finds a mention in the application submitted by the CFO of Kingfisher, A Raghunathan, for the corporate loan on October 1, 2009. However, in the entire appraisal done by the accused officials of IDBI bank, there is no discussion on the admissibility or otherwise of the brand value as a security enforcement in the event of default. No legal opinion on the enforceability of the security was done in the bank while accepting the brand value as one of the securities," the CBI charge sheet states.
"Rather in the terms and conditions of sanction, it was stipulated that the company shall coordinate in arranging legal opinion regarding registration of charge on Kingfisher Airline brand, including a detailed examination on follow through mechanism of enforceability of the security, in case of need," it adds.
The charge sheet also states that rather than accepting the Kingfisher brand valuation as security for the loan, the lower level bank officers had sought a pledge of unencumbered shares as collateral securities. However, this was ignored by the accused bank officials.
"Thus, while on one hand the said intangible asset was accepted as a security by the accused officers, on the other, the efforts made by the lower level officers to seek collateral securities through pledge of unencumbered (debt free) shares of the company were discarded and the loan was sanctioned without adequate securities. Investigation has further disclosed that the reports of M/s Grant Thronton, on the basis of which the brand value of Kingfisher brand was accepted as Rs 3,400 crore explicitly stated that the said brand valuation was done by them for internal purposes was not an investment advice," the charge sheet states.
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 "Kingfisher Airlines")
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