ED to question Reserve Bank over Kingfisher loans

The agency has come across vital clues against banks while furnishing several documents in connection with the loan extended to KFA

Ahead of the Supreme Court hearing on Vijay Mallya's loan repayment plan on April 7, the Enforcement Directorate (ED) is preparing questions for the Reserve Bank of India (RBI) regarding the restructuring of corporate debt of Kingfisher Airlines (KFA).

The agency has come across vital clues against banks while furnishing several loan documents submitted by 17 lenders in connection with the Rs 6,963-crore loans (excluding interest) extended to KFA.

"During the verification of the credit documents, some key issues have been raised which need to be answered," a highly placed source in the ED told Business Standard.

"The major contention was with regards to clearance of the corporate loan restructuring to KFA," he said.
 
Under corporate debt restructuring (CDR) norms, restructuring needs RBI approval. The ED wants to know if due-diligence was followed before giving clearance to banks.

These apart, there have been cases where fake bills of entries were used for huge remittances. "We need to understand the checks and balances of the foreign exchange movements in all these years," said an enforcement sleuth on condition of anonymity.

In 2010, RBI widened CDR to include the aviation sector, and the agency would like to know the scale of the policy decision. This was used by airlines, including Kingfisher, to restructure debt.

Meanwhile, ED issued a third summons to Mallya to present himself before its investigators on April 9 in Mumbai for questioning. Mallya had earlier sought time till May to depose expressing his inability to keep the scheduled date of April 2.