Rs 5646 cr of Vijay Mallya's wealth to be used to pay banks; 'loss impossible to quantify'

In a significant development in the case of fugitive liquor baron Vijay Mallya, a special Prevention of Money Laundering Act (PMLA) court in Mumbai allowed the restoration of properties worth Rs 5,646.54 crore to banks. This means banks can now sell off Mallya's properties to recover the bad loans.

A consortium of 11 banks that gave Mallya loans, led by the State Bank of India (SBI), had approached the special PMLA court seeking restoration of his properties seized by the Enforcement Directorate (ED). 

With the court giving them consent, the consortium of lenders led by SBI can now sell certain real estate properties and securities belonging to fugitive Vijay Mallya to recover loans turned bad with the failure of Kingfisher Airlines.

'Loss of Banks impossible to quantify'

According to a PTI report quoting officials in the know of the situation, the recovery process in banks is guided by the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. The officials have stated that the auction or sale of those properties would be done as per the guidelines in due course of time.

SBI has the highest exposure of Rs 1,600 crore out of the original loan of Rs 6,900 crore to the defunct Kingfisher Airlines. Other banks that have exposure to the airline include Punjab National Bank (Rs 800 crore) and IDBI Bank (Rs 800 crore), Bank of India (Rs 650 crore), Bank of Baroda (Rs 550 crore), Central Bank of India (Rs 410 crore).

Although noting that the bank suffered losses due to Mallya, the court, however, said it was impossible to quantify the exact loss at the moment, while adding that the banks' claim of losses over Rs 6,200 crore was not imaginary. The fugitive liquor baron's legal team has challenged the court's order.

Mallya has been accused in a bank loan default case of over Rs 9,000 crore, which involved his defunct Kingfisher Airlines. The fugitive had offered to pay back the defaulted amount in entirety to various Indian banks and appealed to the Indian Government to accept his offer. He has been on bail in the UK on an extradition warrant since his arrest in April 2019.

Noting that Mallya himself had offered a proposal to repay the due amount, the PMLA court asked, why was the businessman ready to clear the dues if there wasn't any loss to the applicant banks.

(WITH PTI INPUTS)