 "UCO Bank not to allow lawyers to represent Kingfisher")
UCO Bank will not allow Kingfisher Airlines to be represented by lawyers in the wilful default case hearing. The state-run lender has identified, but not declared, the grounded airline company as a wilful defaulter for failing to repay its dues.
The bank had recently sent a show-cause notice to Kingfisher seeking an explanation on why it should not be named a wilful defaulter. “Kingfisher has responded to our notice. They have raised some questions, which we are looking into... We will not allow lawyers to represent the company in the hearing,” a senior UCO Bank executive, who did not wish to be named, told Business Standard.
UCO Bank has lent about Rs 300 crore to Kingfisher. The official said these loans were given as working capital. The airline has borrowed around Rs 6,500 crore from a consortium of 17 banks.
Kingfisher had described UBI's move as "post-haste". The airline company later secured a stay from the Calcutta High Court on the grievance redressal committee's decision to declare it a wilful defaulter.
A wilful default happens when a borrower does not repay his dues despite having the capacity. A borrower is also classified as a wilful defaulter if he does not repay and siphons off the funds or uses the money for a purpose other than the one for which the loan was availed. Once an entity or an individual is declared a wilful defaulter, they are debarred from availing finance from banks and financial institutions. Lenders can also initiate the legal process against such defaulters.
UCO Bank executives clarified the bank is yet to take a final decision on whether to declare Kingfisher a wilful defaulter. "In previous instances, we have found that the decision to declare Kingfisher a wilful defaulter has been challenged in the court of law. Hence, we need to have all the evidence in place before we can declare the company a wilful defaulter," said an official of the bank.
The bank had recently sent a show-cause notice to Kingfisher seeking an explanation on why it should not be named a wilful defaulter. “Kingfisher has responded to our notice. They have raised some questions, which we are looking into... We will not allow lawyers to represent the company in the hearing,” a senior UCO Bank executive, who did not wish to be named, told Business Standard.
UCO Bank has lent about Rs 300 crore to Kingfisher. The official said these loans were given as working capital. The airline has borrowed around Rs 6,500 crore from a consortium of 17 banks.
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The lender's decision to not allow Kingfisher to be represented by lawyers mirrors the move of United Bank of India (UBI), which had identified and declared the company a wilful defaulter in September this year. UBI had said the bank was relying on simple documents and statements, and there was no need for lawyers to be part of the grievance redressal committee meeting, which declared Kingfisher and its directors wilful defaulters.
Kingfisher had described UBI's move as "post-haste". The airline company later secured a stay from the Calcutta High Court on the grievance redressal committee's decision to declare it a wilful defaulter.
A wilful default happens when a borrower does not repay his dues despite having the capacity. A borrower is also classified as a wilful defaulter if he does not repay and siphons off the funds or uses the money for a purpose other than the one for which the loan was availed. Once an entity or an individual is declared a wilful defaulter, they are debarred from availing finance from banks and financial institutions. Lenders can also initiate the legal process against such defaulters.
UCO Bank executives clarified the bank is yet to take a final decision on whether to declare Kingfisher a wilful defaulter. "In previous instances, we have found that the decision to declare Kingfisher a wilful defaulter has been challenged in the court of law. Hence, we need to have all the evidence in place before we can declare the company a wilful defaulter," said an official of the bank.