Mallya case: banks to learn their lesson

The amount that Mallya failed to repay to banks is more than the total default on education loan in the country at a little over Rs 5,000 crore

jasleen

Jasleen Kaur | March 14, 2016 | New Delhi


#Kingfisher Airlines   #Rajya Sabha   #Vijay Mallya   #Banks   #Banking   #Column  


The recent statement from the liquor baron Vijay Mallya indicating he may not return to India at all has another bad news for banks which are putting efforts to recover Rs 7,000 crore from him. 

Putting the entire onus on banks, Mallya has said banks give out loans knowing the risk involved and he should not be made a villain. Of course he should not be. After all his intentions were best, as he claims and it is a bank which decides who gets the loan. It is not the first instance where banks are running after a business giant for recovery of loans. But it seems they have not learnt the lesson yet.
 
Not an easy road ahead for Indian banks

The poor accountability mechanisms have reduced the banking sector, specifically the state-run banks, to weak financial institutions burdened with huge debt of non-performing assets.

Easy loan to big companies, without monitoring the end use of funds, has been some of the reasons for the poor state of banks. Though, the picture changes completely when it comes to giving or recovery of loans from poor farmers. Even today, poor farmers are forced to commit suicide if they fail to pay off small loans.

No one can be blamed alone in the entire episode of Rs 7,000 crores scam. While a clear case of default and fund diversion and financial irregularities happened way back in December 2011 by Mallya. It was only in November 2015, when the State Bank of India (SBI), leading lender in the consortium, tagged him as wilful defaulter.

Only in March this year, SBI, which heads the consortium of 17 lenders to the Kingfisher Airlines, sought arrest of Vijay Mallya, when the bank approached Debt Recovery Tribunal. It sought action against him defaulting on loans over Rs 7,000 crore.

It was considered to be a strong action, but it was little too late. Banks filed petition in the supreme court to ensure Mallya does not flee from the country. But the liquid baron, who was already tipped off about the banks moving court, had already left the country.

It created a huge political uproar with political parties blaming each other for creating an easy path for Mallya to escape. But the entire story reflects how easy it is to manipulate things and make mockery of India law and judiciary for at least some people in the country.

Mallya is accused of defaulting Rs 7,000 crore. According to an estimate this is more than the total default on education loan in the country at a little over Rs 5,000 crore. It would be difficult for anyone to accept that the government and investigating agencies were unaware that the system was manipulated.

So far Mallya has not showed any willingness to repay. He has managed to use the judicial system to delay the loan repayment to banks.
While there is a clear chance that banks recovers only a fraction of their several thousand crores of dues as have been the story in the past.

Picture will be clearer in the coming months when we will see how severely Rajya Sabha member Vijay Mallya is dealt with. But the only hope one can have is that the banks learn a lesson this time and do not repeat the same mistake again.

Comments

 

Other News

Dharma as the original Idea of India

Dharma: Hinduism and Religions in India By Chaturvedi Badrinath Edited by Tulsi Badrinath Penguin, 194+ xiii pages, Rs 499 How to live: That is the most fundamental question of human existence.

Prakash Ambedkar on why he wants other parties to mention the candidates’ community

Prakash Ambedkar, grandson of Dr BR Ambedkar and popularly known as Balasaheb Ambedkar, heads the Vanchit Bahujan Aghadi (VBA). The three-time MP founded this new political party last year with a vision of Ambedkarism, secularism, socialism and progressivism. The VBA, registered this year before the Lo

Maharashtra, Haryana polls: parties spent Rs 280.72 crore on publicity

Political parties that contested the Maharashtra and Haryana assembly elections in 2014 spent the largest part of their expenses, Rs 280.72 crore (77.35 percent), on publicity, shows an analysis by the National Election Watch (NEW). This was followed by Rs 41.40 crore on travel expenses, Rs 22.59 crore on

Why Modi-Xi informal summit in Mamallapuram is important

Barely four days are left for Chinese president Xi Jinping to land in Mamallapuram (or Mahabalipuram) for an informal summit with prime minister Narendra Modi. While official confirmation is still awaited at the time of writing, the two leaders are expected to meet in this Tamil Nadu town known for its tem

Aarey tree cutting: Supreme court orders status quo

Citizen protesters had some relief on Monday as the Supreme Court ordered a status quo pm the cutting of trees in Aarey forests of Mumbai to build a Metro Rail shed. The apex court’s forest bench will hear the matter in detail on October 21 to find out if the selected site falls in the

Single-use plastic ban: Govt to focus on awareness

After prime minister Narendra Modi in his independence day address to the nation referred to the environmental harm caused by single-use plastic, the government was widely expected to come out with a formal ban on the substance from October 2, the 150th birth anniversary of Mahatma Gandhi. There has been n



Current Issue

Current Issue

Video

CM Nitish’s convoy attacked in Buxar

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter