SBI did not get back the loan it gave to Kingfisher. Kingfisher was bailed out by converting the loan into shares. Now comes the news that SBI has referred 4,300 crore rupees loan taken by Hotel Leela to corporate debt restructuring (CDR). It is said that Hotel Leela has not defaulted. It wants interest rate reduced from 14% to 11% and longer schedule for payment. Perhaps the owner of Hotel Leela thinks he can default and get away just like Vijay Mallya of Kingfisher did. Hotel Leela perhaps wants the same treatment. Who is next in line for default? How is that SBI gave thousands of crores of rupees as loan and unable to recover them? Pilots of Air India and Jet Airways are likely to go on strike. Will SBI and other public sector banks bail out every airline, hotel, tea estate and so on? SBI and other public sector banks are not private property of Manmohan Singh, Veerappa Moily, Congress or UPA.
What is going on? Where are people who speak against loan write-offs, freebies and subsidies? Where are economists who speak of fiscal deficit?
There was no discussion on TV channels about CDR to Leela. What are they waiting for? Will they discuss after Leela defaults and asks for another loan?
SBI should stop CDR. Those who borrow must pay as per agreement. Interest should not be reduced. Payment period should not be extended. Hotel Leela must have pledged something as collateral for loan. SBI should attach the collateral.
Vijay Mallya is known as king of good times. He owns an IPL team. He owns a Formula One team. He constructs a multi-storeyed building beside a road named after his father. He hires models and has photoshoots outside India for his calendar. For all that he has money. He has no money to pay loan taken by Kingfisher Airlines which he owns. The airline has a loan of 6,000 crore rupees and he wants government to bail him out. Civil Aviation Minister Vayalar Ravi is ready to help him. Vayalar Ravi said â€œThe aviation industry is facing crisis. These carriers may be privately owned but are Indian carriers, and the ministry will have to watch out for them.â€
Kingfisher Airlines had defaulted on payment of oil bills. Some flights were cancelled and the airline was put on cash-and-carry system.
This is not the first time Vijay Mallya has approached the government for a bail out. Previously Kingfisher Airlines had a debt of over 7,000 crore rupees and State Bank of India, Bank of Baroda, Punjab National Bank, ICICI Bank, IDBI Bank and some other banks converted part of loan into shares at Rs.64.48 when the market price was around Rs.48. On remaining loan interest was lowered to 11% and repayment period was extended to nine years.
Public sector banks are the property of the people of India. They are not the property of the government. Ministers should know that. For too long there has been privatization of profits and nationalization of losses. Companies that make losses should be allowed to shutdown or go bankrupt. Board for Industrial and Financial Reconstruction should be wound up. Robbing the poor to pay the rich should stop. Vijay Mallya should pay the loan as per the terms agreed for borrowing. There should be no interest reduction or extension of payment period or conversion of loan into shares. Credit rating agencies have brought down the rating of State Bank of India. Vijay Mallya can pay from United Breweries or other companies. He can sell aeroplanes he owns. He can continue to be king of good times but not at the expense of Indiaâ€™s taxpayers.
Kingfisher Airlines said they had not requested for restructuring of second debt? Did they ask for loan write-off or conversion of loan into shares?
Vayalar Ravi should concentrate on Air India which has become a black hole gobbling up money. It has loans amounting to 40,000 crore rupees and there is no sign of improvement. Pilots and other frequently go on strike. No more loan should be given to Air India and if employees do not behave the airline should be shutdown. It is for the aviation industry to face the crisis and the ministry does not have to watch out for private Indian airlines.
India needs a movement stronger than Occupy Wall Street. Protesters should occupy offices of ministers, corporates and banks against such practices.
In 1953 or thereabout the government of India nationalized Imperial Bank and changed its name to State Bank of India.
In 1969 the government of India nationalized 14 banks. In later years more banks were nationalized.
Some years back there was a proposal to nationalize those banks as they were making losses. The employees protested saying there were not responsible for losses.
The banks had lent to many industrialists who had not repaid the loan and that was the reason for losses. Many industrialists in India would have gone bankrupt years ago if banks had insisted on payments.
The report that a group of banks led by State Bank of India allowed Kingfisher Airlines which has a debt of over 7,000 crore rupees to convert a part of loan into share at Rs.64.48 each when the market price was around Rs.48 is disturbing. The owner of Kingfisher Airlines owns an IPL team. Nothing has changed over the years. Some years back Essar Group was bailed out. Many companies are regularly bailed out by banks. Many times companies donâ€™t pay and banks convert loans into shares often at a cost higher than market price. Once a companyâ€™s loan was converted into shares of Rs.10 each when the market price was around Rs.6.
Many real estate companies borrowed from banks and bought land at high prices. They were unable to sell flats. Banks did not act against defaulters. Defaulters going to court and long legal proceedings should not be a deterrent.
Nationalized banks belong to the country. If a company is unable to pay the loan winding up petition must be filed against the company. The government of India must come out with a white paper on defaulters.