Flamboyant business tycoon Vijay Mallya-promoted, Kingfisher Airlines, whose properties in Mumbai, Panaji and Bengaluru were raided by the Central Bureau of Investigation (CBI) on Saturday, had borrowed around Rs.7,000 crore from 17 financial lenders.
A consortium of 17-state-owned financial lenders led by India's largest lender State Bank of India was formed to recover the money from the airline company.
Debt-ridden Kingfisher Airlines was virtually grounded on October 1, 2012 as the passenger carrier cancelled all 50 flights after a section of its employees went on strike leaving thousands stranded. It lost its operator's licence on October 20, 2012.
The CBI on raided houses and offices of Mallya and Kingfisher in a case of alleged fraud in a Rs.900 crore loan from the IDBI bank, which had declared it as a non-performing asset, an official said.
"The raids are still on at five places of Mallya's offices and residences in Mumbai, Bengaluru and in Goa in a case of allegedly violating banking norms in sanction and disbursement of over Rs.900 crore to Kingfisher Airlines," a CBI spokesperson in New Delhi told IANS in the afternoon.
The CBI has also searched premises of Kingfisher chief financial officer A. Raghunathan and unnamed officials of IDBI Bank on same charges.
In August 2014, CBI had served an inquiry notice on IDBI Bank over its loan to the defunct airline company, saying this extent of exposure was not bona fide.
The Kolkata headquartered United Bank of India (UBI), which was owed Rs.400 crore by Kingfisher, first declared Mallya a wilful defaulter in May 2014. But Mallya's lawyers managed to convince the Calcutta High Court in December that the process of declaring him so was faulty.
In the last annual general meeting of UBI held in June this year, its managing director and CEO P. Srinivas said: "We are fighting a legal battle against them (Kingfisher Airlines) beyond the consortium and we have already declared their corporate guarantor as willful defaulter."
The guarantor, Mallya, was declared a willful defaulter after the dues to the bank were not repaid.
India's apex bank -- Reserve Bank of India (RBI) - extended the ambit of the term "wilful" defaulter to include not only the primary defaulting entity, but also the guarantors of its loans, and individuals on the boards of companies declared to be in wilful default.
The SBI's loan exposure to Kingfisher was in the tune of Rs.1,623 crore and Bank of India, a medium-sized bank, is owed Rs.308 crore.
Mallya owns a 'Hollywood' style Kingfisher Villa at Candolim in Goa. Another prime property is Kingfisher House, measuring 17,000 square feet in Mumbai's suburban Andheri locality. Reportedly, the property was originally hypothecated to Punjab National Bank in 2010 and Kingfisher Airlines owes the bank Rs.290 crore.
Kingfisher owes Indian Overseas Bank a sum of Rs.108 crore and Central Bank of India gave a term loan of Rs.350 crore to the airline company.
