A defaulting company or person will not be allowed to borrow money from any bank and will cease to hold any official post in the firm
New Delhi : State-owned United Bank of India became the first lender to declare debt-ridden Kingfisher Airlines, its promoter Vijay Mallya and other directors wilful defaulters as the company allegedly indulged in diversion of funds by opening multiple accounts, reports PTI.
“We have declared Vijay Mallya and three other directors of Kingfisher Airlines as wilful defaulters,” UBI Executive Director Deepak Narang told PTI.
The other directors declared as wilful defaulters by the Grievance Redressal Committee (GRC) of the bank are Ravi Nedungadi, Anil Kumar Ganguly and Subash Gupte.
Ganguly and Nedungadi are also directors on the board of United Breweries (UB) Ltd. in Bangalore.
The bank had advanced about Rs.400 crore to the airline in fiscal 2006-07 from its Bangalore branch towards working capital and operational expenses.
Kingfisher Airlines and directors declared as wilful defaulters will not be able to borrow from banks in the future.
They would also lose Director-level positions in companies and criminal proceeding could be initiated against them, if warranted, to recover the money. Commenting on the development, Financial Services Secretary G S Sandhu said: “Any company in which they are directors, those companies would be affected. The idea is to exclude them from financial sector.”
The company had allegedly opened multiple current accounts leading to diversion of funds, said a bank official, adding that there is a balance of Rs 7.5 crore in other-than-the- designated current account as on date.
Narang said the decision of GRC would be conveyed to the Finance Ministry, Reserve Bank of India, and Securities and Exchange Board of India for their information and action.
The GRC meeting was convened on Monday after a Calcutta High Court division bench allowed the bank to initiate the process of declaring them as wilful defaulters last week.
The GRC had asked directors to be present before it but no one turned up.
With an accumulated losses of Rs.16,023 crore and a negative net worth of Rs.12,919 crore, the airline has an exposure of Rs.8,000 crore in the form of debts from a consortium of 14 banks, aircraft leasing firms, airport operators, state-run oil marketing firms and other vendors.