Trouble seems to be mounting for Vijay Mallya. State Bank of India - the largest lender to defunct airlineKingfisherBSE 3.03 % - has declared the carrier, its promoter Mallya and United Breweries Holdings as "wilful defaulters" after its grievance redressal committee rejected the arguments made by the borrower through its legal representative recently.
The move comes even as the Enforcement Directorate (ED) is set to launch a money laundering probe against Mallya and Kingfisher Airlines. Sources said the agency has asked for a copy of the FIR filed by CBI so that a case under the Prevention of Money Laundering Act could be filed against Mallya and the airline on the basis of "prime facie evidence". It is alleged that a major chunk of loans to the tune of Rs 4,000 crore extended to Kingfisher by nationalised banks, which are now under CBI probe, were diverted to tax havens such as Cayman Island and Mauritius.
Sources said that Mallya's role is being probed as the head of the company as initial investigations have pointed to possible misuse of bank funds. Officials said a loan taken from IDBI BankBSE -1.97 % was shown to have been used for leasing aircraft from companies based in tax havens and high rent was paid to the companies.
For the 'king of good times', the immediate worry would be the action taken by SBI after he mounted a legal challenge in similar cases initiated by other banks. Sources said SBI had taken pains to ensure that the charges stick.
The biggest implication of a wilful defaulter tag is that banks will not lend to any business associated with a wilful defaulter. Two, they may even push for change of management of companies where they have sizeable exposure and promoter has been declared a wilful defaulter.
SBI had proceeded against the airline on the grounds that funds were not used for the assigned purpose and loans were not paid even when there were resources available.
The move comes even as the Enforcement Directorate (ED) is set to launch a money laundering probe against Mallya and Kingfisher Airlines. Sources said the agency has asked for a copy of the FIR filed by CBI so that a case under the Prevention of Money Laundering Act could be filed against Mallya and the airline on the basis of "prime facie evidence". It is alleged that a major chunk of loans to the tune of Rs 4,000 crore extended to Kingfisher by nationalised banks, which are now under CBI probe, were diverted to tax havens such as Cayman Island and Mauritius.
Sources said that Mallya's role is being probed as the head of the company as initial investigations have pointed to possible misuse of bank funds. Officials said a loan taken from IDBI BankBSE -1.97 % was shown to have been used for leasing aircraft from companies based in tax havens and high rent was paid to the companies.
For the 'king of good times', the immediate worry would be the action taken by SBI after he mounted a legal challenge in similar cases initiated by other banks. Sources said SBI had taken pains to ensure that the charges stick.
The biggest implication of a wilful defaulter tag is that banks will not lend to any business associated with a wilful defaulter. Two, they may even push for change of management of companies where they have sizeable exposure and promoter has been declared a wilful defaulter.
SBI had proceeded against the airline on the grounds that funds were not used for the assigned purpose and loans were not paid even when there were resources available.
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