Voice from the Rooftop

Blog of Vincent Augustine D'Souza

Kingfisher arrests

One criticism against Barack Obama was that nobody went to jail for frauds that caused depression of 2008. In India at least some people went to jail for causing loss to a public sector bank.
On 23/1/2017 CBI arrested nine persons; four were former officials of IDBI Bank. They were Chairman Yogesh Aggarwal, Deputy Managing Director O. V. Bundelu, Executive Director S. K. Srinivasan, and General Manager R. S. Sridhar. Also arrested was present Deputy Managing Director S. K. Batra. Other four were former officials of Kingfisher Airlines. They were Chief Financial Officer A. Raghunathan, Assistant Vice President Shailesh Borkar, Senior Manager (Accounts) A. C. Shah, and Deputy General Manager Amit Nadkarni. In 2009 IDBI Bank had given loan of 900 crore rupees to Kingfisher Airlines when the company had declared a loss of 1,600 crore rupees. The company had BB rating which showed it was risky to give loan but the bank gave the loan. Of the 900 crore rupees, 262 crore rupees were diverted for personal use, 422 crore rupees went to offshore accounts.
On 24/1/2017 CBI filed a charge sheet against Vijay Mallya and others. Vijay Mallya owned Kingfisher Airlines. The charges are criminal conspiracy, cheating and corruption. Vijay Mallya is absconding. He was allowed to flee. The court sent others to judicial custody till 7/2/2017.
Kingfisher owes money to State Bank of India, Punjab National Bank, IDBI Bank, Bank of India, Bank of Baroda, United Bank of India, Central Bank of India, UCO Bank, Corporation Bank, State Bank of Mysore, Indian Overseas Bank, Federal Bank, Punjab and Sind Bank, Axis Bank, and some other banks. State Bank of India had lent 1,600 crore rupees to KA.
The arrests of bank and company officials are significant. Bank officials have to be careful about lending. Company officials have to be careful about borrowing. Many companies take loans and default. The loans are written off. Under Modi government things have become worse. Names of defaulters and cases of corporate debt restructuring and strategic debt restructuring should be made public.
Auction of Kingfisher properties has not been successful. There were no takers at reserve price. For long there were adjournments in Debt Recovery Tribunals.
There are no discussions on TV channels about Kingfisher arrests. This is a matter of importance. Silly statements are given publicity. People who have money in the bank are unable to withdraw the amount they want. The Committee of Chief Ministers on Digital Payments headed by Chandrababu Naidu has suggested reintroduction of banking cash transaction tax on withdrawals of over 50,000 rupees. That should not happen. People should not have to pay tax for withdrawing their money from the bank.

Updated: January 26, 2017 — 7:37 am

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