The promoter of the defunct Kingfisher Airlines would have to show specific assets and money for repayment.
Liquor baron Vijay Mallya on Wednesday told the Supreme Court that he would pay Rs 4,000 crore (Rs 40 billion) by September as settlement for a default on loans to banks.
Lenders, however, are taking the offer with a pinch of salt.
They claim the submission of a plan to repay six months later is hardly satisfactory.
The promoter of the defunct Kingfisher Airlines would have to show specific assets and money for repayment.
“The banks want to see the money,” said one of them.
A senior advocate appearing for the consortium of banks, which has taken Mallya to court for default, said the proposal was submitted in a sealed envelope by the Kingfisher Airlines, United Breweries and Kingfisher Finvest, along with their promoters.
Mallya owes the consortium, led by the State Bank of India, Rs 6,903 crore (Rs 69.03 billion).
He left India on March 2 and his exact whereabouts are not known.
A Bench comprising Justice Kurian Joseph and Justice R F Nariman allowed the consortium of banks a week's time to respond to the proposal and posted the matter for hearing on April 7.
A public sector bank official said: “It is not a normal bank-borrower issue and also can't been seen as routine settlement case.
"Banks are conscious of fact that it (plan) comes with much delay and after filing of suits against KFA and Mallya in various legal forums for recovering dues.”
Banks have not had satisfactory experience in recovering money by selling assets.
The auction for Kingfisher House, KFA’s headquarter in Mumbai, failed to get even a single bid.
They have also put the trademark and brands of KFA on the block to get money.
A Bank of Baroda executive said: “The money (lent to Mallya and his companies) is public money.
Any step to write-off any part will certainly create uproar.”
A State Bank of India executive said: “Assessments indicate there are assets worth over Rs 8,000 crore, which either belong to him or have his imprint.
These could be used for recovery.”
“This is a case of willful default so we will have to drive a hard bargain,” agreed two other public sector lenders.
SBI and Punjab National Bank have already declared Mallya and KFA as wilful defaulters — borrowers who fail to pay dues despite having the assets to do so.
A senior public sector banker said while there was no direct participation or involvement, the Prime Minister's Office was closely monitoring the Mallya case.
UB Group stocks, led by United Breweries, soared by up to 12.2 per cent on Wednesday.
Shares of United Breweries (Holdings) zoomed 12.20 per cent to settle at Rs 20.70 on the BSE.
During the day, it jumped 15.71 per cent to Rs 21.35.
McDowell Holdings rose 4.36 per cent, Mangalore Chemicals & Fertilizers was up 1.82 per cent and United Breweries 0.21 per cent.
A lawyer for Mallya also told the Supreme Court that Kingfisher could pay another Rs 2,000 crore (Rs 20 billion) to banks if it wins a lawsuit seeking damages from a plane engine maker.
The lawyer did not give a time frame for that payment.
Mallya’s UB Group did not reply to a request for comment on the repayment offer.
Kingfisher, once India’s second-biggest airline, ceased operations more than three years ago after a stretch of losses, leaving creditors, suppliers and employees with unpaid dues.
Once known as the 'King of Good Times' for his extravagant lifestyle, Mallya has denied that he had fled India and said he would comply with laws.
Media reports have traced him to the Hertfordshire village of Tewin, north of London, where he owns a house.
Senior advocate C S Vaidyanathan, appearing for Kingfisher and Mallya, confirmed that he was in UK, from where he had a video conference with his counsel on Tuesday.
“Where are you? Are you back in India?” the judges asked the counsel.
“The Media has vitiated the atmosphere,” Vaidyanathan said.
The Bench said “media ultimately stands for the public interest. They just want the money taken from the banks to be brought back.”
Image: A file photo shows Vijay Mallya walking in the paddock during the Australian Formula One Grand Prix.
Photograph: Mark Thompson/Getty Images
