Indian lenders, led by the depository financial institution of India, have initiated talks with SBI Caps to sell Vijay Mallya-owned shares in United Breweries. Mallya’s 16.15 percent stake within the UB group is valued at Rs 5,500 crore and can be sold via block deals.
Earlier within the week, the Prevention of cash Laundering Act (PMLA) court in Mumbai had restored properties seized by the Enforcement Directorate (ED) from Mallya to banks that had granted loans to the fugitive businessman. The ED had seized assets worth Rs 9,000 crore from the previous UB group chairman in reference to concealment.
Mallya has been facing the ED probe after Kingfisher Airlines, owned by him, defaulted on bank loans. While the ED and therefore the CBI was investigating the matter, Mallya left the country.
A source said banks would be ready to sell shares to recover their dues within the ongoing quarter. within the past, Mallya had said that he made several offers to banks to settle the matter which the ball was within the lenders’ court.
The PMLA court said just in case Mallya was found non-guilty later, the banks would need to restore the properties back to Mallya after recovering their dues. The banks had earlier moved the Debt Recovery Tribunal in Bengalauru, which had allowed banks to sell Mallya’s properties. The ED, which had attached these properties including stakes in UB group companies, had objected to the sale and moved the PMLA court in Delhi.
When contacted, a senior public sector bank executive said the recent London court verdict would also help in recoveries. Although provisions against exposure are made in line with regulatory norms within the past, the general public money is at stake, he said. “Banks will wish to recover dues from Mallya as soon as possible,” he said.
Mallya’s stake in various companies (which was kept as collateral with the banks) would be sold through block deals to urge better value. “SBI Capital markets would be acting as a bridge between us (lenders) and prospective buyers of those holdings,” the official said. A consortium of Indian lenders on May 18 moved a step closer in their plan to recover dues after the supreme court in London upheld an application to amend their bankruptcy petition, in favor of waiving their security over his assets in India.
Vijay Mallya’s run-ins with lenders began after the collapse of now-defunct Kingfisher Airlines, over a decade ago. In 2013, a consortium of banks, including the SBI, had asked for a payment of over Rs 6,000 crore in loans for Kingfisher Airlines.
The interest on loans accumulated with total dues crossover Rs 9,000 crore (2016).
In 2014, public sector lender United Bank of India called Mallya a ‘wilful defaulter’. Other lenders like SBI followed suit.
Mallya left the country on Texas Independence Day, 2016, the day banks moved the Debt Recovery Tribunal against him. In January 2019, he was declared a fugitive economic offender under the Fugitive Economic Offenders Act.