United Bank of India targets UB Holdings over Kingfisher default
![United Bank of India targets UB Holdings over Kingfisher default United Bank of India targets UB Holdings over Kingfisher default](http://cdn.deccanchronicle.com/sites/default/files/Vijay Mallya UBHL Diageo_0_0_0_0_0_0.jpg)
Mumbai: State-owned United Bank of India (UBI) has identified liquor baron Vijay Mallya's United Breweries Holdings Ltd as a 'wilful defaulter' over non-payment of loans by his group's grounded carrier Kingfisher Airlines.
India has been alarmed by the rise in bad loans, particularly at the state lenders that dominate the banking system, and is cracking down on so-called wilful defaults.
The Reserve Bank defines a wilful defaulter as a borrower that is able but unwilling to pay, has diverted loan proceeds for other than their initially stated use, or has overstated profits to obtain a loan.
United Bank is proceeding against United Breweries Holdings as it was a guarantor to the Kingfisher loan, a senior bank official said on Wednesday, adding that the bank's loan exposure to the carrier was more than 4 billion rupees.
The move piles pressure on one of India's most-prominent businessmen, who is also being pursued by other Indian banks for not meeting loan repayment obligations linked to his Kingfisher Airlines.
A wilful defaulter tag may hurt a company's fundraising prospects and lead to the dismissal of its executives.
Kingfisher has not flown for more than two years and it owes more than $1 billion to a consortium of banks, mostly state-owned.
India rejected the re-appointment of Mallya as managing director of Kingfisher, the company said on Monday.
The carrier had secured a stay order from a regional court against United Bank's earlier move declaring it and its directors as wilful defaulters. That case is ongoing.
"We analysed their balance sheet and found that in 2013/14 they had surplus money...which they could have used to pay our loan," said Deepak Narang, an executive director at United Bank, on the move to identify United Breweries Holdings as a wilful defaulter. He was referring to the fiscal year ended March 2014.
"They didn't pay," Narang told Reuters.
Mallya, chairman of the UB Group and known for his flamboyant lifestyle, was not immediately available for a comment.
Mallya gave up his board position at Mangalore Chemicals and Fertilisers Ltd, a group company, the company said this week without citing any reason.