It appears all hell broke loose after the "wilful default" committed by Kingfisher Airlines and Vijay Mallya's hasty flight from India, with some TV channels spending hours of airtime on the airline promoter and the bankers involved in the episode. In hindsight, the lending to the firm by bankers cannot be faulted. At the time of initial proposal, everything might have been good on paper and there was no reason to suspect anything untoward given Mallya's success as an industrialist.
It is also observed that the bankers had obtained the corporate guarantee of United Breweries and Mallya's own guarantee for the exposure made to Kingfisher Airlines, which isn't done normally in the case of loans to big corporate houses. It is because of this step that the banks are now able to go after Mallya for recovering dues.
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The banks had soon enough approached the Debt Recovery Tribunal and Karnataka High Court, which refused to issue orders on time. The banks were aware that starting a new airline was a losing proposition, but the losses were incurred after meeting all the repayment commitments, as projected. Except for one, all other private airlines are running in losses. So, the failure of Kingfisher was due to some deliberate diversion of funds. The bankers deserve blame at this point. When it was known that the company was facing problems, instead of finding out the reasons, the bankers went all out to "help" it by pumping in additional money.
One would expect the banks to pursue the case relentlessly to ensure Mallya is shown his place and the dues are recovered from all his assets as well as that of United Breweries invoking the guarantees available, which should serve as a lesson to other big corporates acting this way.
BCU Nair, Alappuzha
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