I am of the opinion that L'affaire Kingfisher Airlines has been blown out of proportion by the media. The "wilful default" committed by Kingfisher Airlines and its promoter Mr Vijay Mallya and Mallya's leaving the country in haste have resulted in a big hungama with some TV channels spending hours of the airtime to hang Mr Mallya and also the Bankers involved.
I do not hold any brief either for Mr Mallya or for the Bankers involved, but would like to mention a few facts in the whole exercise.
First and foremost is the fact that the lending to the firm by the Bankers cannot be faulted now with the benefit of hindsight. At the time of initial proposal, everything might have been good on paper and the man behind the venture Mr Mallya himself , being a successful industrialist, there was no reason to suspect any untoward things happening in the future. And to the benefit of Bankers, it is also observed that they had obtained the corporate guarantee of United Breweries and personal guarantee of Mr Mallya for the exposure made to Kingfisher airlines, which is not done normally in the case of loans to big corporate houses. It is because of this particular step that the Banks are now able to go after Mr Mallya personally for recovering the dues. The supreme court can help the banks in the matter by directing Mr Mallya to declare all the assets owned by him, which can be attached thereafter for recovering the dues.In this, he will not be able to escape.
Mr Mallya's leaving the country is blown out of proportion, it seems. Unless he turns defiant to the direction of supreme court to present himself before the court, we cannot fault his travel. Admitted that the Banks were a bit delatyed in making the move, but they had already approached DRT and High Court of Karnataka sufficiently early, who refused to issue orders on time. So much for the support of the legal system available to the Banks in recovering their dues!
It is a fact that the Banks were aware that the proposal to start a new airline was a losing proposition, but the losses were after meeting all the repayment commitments, as projected and hence Banks would not have bothered about that. For that matter except for one, all other private airlines are running in losses and so the failure of Kingfisher Airlines was not because of this but because of some deliberate diversion of funds from the business. It is at this point the Bankers need to be blamed. When it was known that the company was having problems, instead of finding out the actual reasons, the bankers went all out to "help" it by pumping in additional money and at this stage some banks even bought the shares from the promoters at a rate higher than the market rate, as part of restructuring, it seems!!! And , as collateral for additional exposure they accepted the brand name of "Kingfisher"!!! (It is the first time I am hearing about accepting an intangible as collateral security by a Banker!! What a prudence!)
All said and done, I would expect the Banks to pursue the case relentlessly to ensure that Mr Mallya is shown his place and the total dues are recovered from all his assets as well as that of United Breweries invoking the guarantees available, which should serve as a lesson to other big corporates acting this way in future. Banks should also arrange to have a re look into the whole issue of Corporate Debt Restructuring (CDR) done for the Company, which has led to the present situation.
Another pertinent question that arises in the instant case is that whether Mr Mallya is eligible to continue as a Member of Rajya Sabha after he has been declared as a "wilful defaulter' by more than one bank. As far as I understand, a person will not be eligible to contest an election, if he is a loan defaulter and hence by the same logic, shouldn't his membership be cancelled by the Chairman immediately?
I hope instead of taking it as a corporate war, all the parties concerned should think logically and come to a situation where the public sector banks of the country are not taken for a ride by such unscrupulous businessman, whatever be their connections. The Bankers also need to rise above the political compulsions and work as prudent bankers when dealing with public money, whatever be the cost to be paid for the same. We should remember the likes of Mr Talwar, who had shown courage to stand up and say NO to unjustified demands from political leaders!
