The Central Bureau of Investigation has said that IDBI Bank officials, who have been arrested in the Kingfisher Airlines case, diluted the security requirements in respect of the Rs 950 crore loan in two stages; prior to the loan sanction and post-sanction thereby facilitating disbursement.
AFP
The report highlights several instances where the sanction process was weakened to allow loans to a company that was rated sub-investment grade and did not fall within IDBI Bank's own parameters for creditworthy companies. Also, the bankers waived the requirement for additional security while advancing this loan, the charge sheet said.
One indication of the dilution was that liquor baron Vijay Mallya shrank his declared net worth by 80% in nine days. While his statement of assets in respect of an earlier term loan gave Rs 1,395 crore as his net worth on March 31st 2009, at the time of offering a personal guarantee his net worth was shown as only Rs 285 crore. The agency has said that there was no intent on the part of Mallya to repay and there was a criminal conspiracy to this end.
BCCL
IDBI Bank is one of the 16 lenders which are collectively fighting legal battles to recover bad loans worth over Rs 6,000 crore of principal advanced to Kingfisher Airlines from promoter Vijay Mallya and his group companies. While Mallya, is currently in UK and refusing to return to India, the CBI last this week arrested 10 people including KFA and IDBI Bank officials on charges of conspiracy and causing a loss to the public sector bank.
In a chargesheet that runs into several hundred pages of charges, witness statements and documents the CBI said that in the pre-sanction stage BK Batra, executive director, OV Bundellu, deputy md, SKV Srinivasan executive director with the consent and knowledge of the chairman Yogesh Agarwal, who approved the minutes, deliberately omitted to include the pledge of unencumbered shares as collateral and also failed to recover the short-term loan of Rs 150 crore from the corporate loan of Rs 750 crore despite both loans being for the same purpose. In the post sanction stage, the charge sheet states that the officials relaxed the pre-disbursement and security creation condition. These were the same conditions that were highlighted to address risk concerns raised by the risk management department.
BCCL
The report states that while Sridhar sought to recover the short-term loan of Rs 150 crore and tried to obtain additional security in the form of unencumbered shares the same was denied by Vijay Mallya.
The charge sheet quotes an email where Mallya informs his chief finance office that IDBI Bank cannot be given additional shares as they are part of the same consortium and will be entitled to the same securities as other banks. He also said that the first loan of Rs 150 crore was outside the consortium and would be repaid on maturity.
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