United Bank of India, one of the many lenders to Mallya’s now-grounded Kingfisher Airlines, has alerted Sebi that it had identified the airline as a ‘wilful defaulter’.
“The bank has requested Sebi to reconsider its approval to the Mallya-Poddar open offer,” said a person familiar with the development.
A senior executive confirmed the bank had alerted Sebi on the issue.
“On July 17, the bank wrote to the Sebi chairman. . . It appears Kingfisher Airlines’ group companies have money to make acquisitions but not to repay the dues of the airline,” said the banker who did not wish to be named.
"In this case, Kingfisher Airlines has been identified as a wilful defaulter.
"But since the company has moved court, the bank is yet to declare it as a wilful defaulter.
"This has been explained to Sebi,” the banker said.
According to the Reserve Bank of India guidelines, a wilful default happens when an entity does not repay its dues despite having the capacity to pay and does not use the borrowed money for the purpose a loan was availed of.
For instance, if a borrower uses short-term working capital funds for long-term purposes or deploys the borrowed money for creation of assets other than those for which the loan was sanctioned, it is interpreted as diversion of funds and the borrower is classified as a ‘wilful defaulter’.
A spokesperson for Zuari declined to comment.
Kingfisher Airlines had moved the Calcutta High Court challenging UBI’s communication that had asked board members, including Mallya, to meet the bank officials for an alleged wilful default on Rs 400 crore (Rs 4 billion)
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