Banker's Trust: Has crony capitalism hijacked bad loan resolution?

If bankers move fast and preserve the enterprise value of defaulting companies, recovery rate will improve even as the new insolvency law, much like the GST, remains a work in progress

In the last week of June, a State Bank of India-led consortium that had lent to fugitive businessman Vijay Mallya, the promoter of now defunct Kingfisher Airlines Ltd, received Rs 5,824.5 crore selling a group company’s shares, which were attached under the anti-money laundering law. Kingfisher owed around Rs 9,000 crore to the banking system. With this, the banks have recovered at least 70 per cent of their exposure to the airline. They will get more, selling seized assets.

Overnight, Mallya, the villain among the borrowers, has acquired sainthood. But new villains have appeared on the scene. Lenders to the