CBI starts probe into IDBI Bank loan to wingless Kingfisher
09 Aug 2014
The Central Bureau of Investigation (CBI) today registered a preliminary enquiry against IDBI Bank Ltd over its decision to sanction a loan of Rs950 crore to the now long grounded Kingfisher Airlines at a time when Kingfisher had a negative net worth and a negative credit rating.
''It was the first exposure of the bank. There was no need for the bank to take the exposure outside the consortium when already other banks' loans were getting stressed,'' said a CBI official.
A senior IDBI executive said that CBI had asked for certain specific information and the bank had provided the same; but, ''we do not know about any investigation as of now''.
Kingfisher Airlines owes Rs7,500 crore to a consortium of banks led by the State Bank of India. In February 2013, bankers publicly stated they had lost faith in the management's ability to revive the company.
Banks had then initiated recovery measures, and have been able to recover Rs550 crore by selling the equity they held in the troubled airline promoted by liquor baron Vijay Mallya.
Kolkata-based United Bank of India, which tagged Vijay Mallya a ''wilful defaulter'', has been dragged to court by Mallya. A case is on in the Kolkata high court.
Reserve Bank of India governor Raghuram Rajan has often said that wilful defaulters must be dealt with strictly. In a conversation with business publications on 6 August, Rajan had said that governance standards in public sector banks must be brought on par with the best.
Rajan added that the RBI, along with other regulators like the Securities & Exchange Board of India, would toughen norms for wilful defaulters in the banking system.
On Friday, speaking on the sidelines of a press conference, State Bank of India chairperson Arundhati Bhattacharya, said that Syndicate Bank incident may impact the morale of bankers.
''We accept all proposals, but very rigorous due diligence is done by our officials before sanctioning a loan. We are never dependent on these people (brokers) for our loans. The episode (bribe taking) is more an individual act than at the institution level,'' said Bhattacharya.
