Vijay Mallya may be forced to exit boards of UB, United Spirits

UB Group chairman Vijay Mallya, currently chairman of the boards of United Breweries and the allied United Spirits (now majority owned by Diageo) may have to exit both boards if he is declared a wilful defaulter over his failed Kingfisher Airlines.

Three major state-run banks - State Bank of India, Punjab National Bank and IDBI - are expected to soon initiate the process to declare Kingfisher Airlines and some other corporate borrowers as wilful defaulters after the firms failed to service their debt, reports today said.

As reported in Domain-b earlier, the lenders have been contemplating such serious steps for some days now, with Kingfisher a prime target - it owes moneys to a lending consortium of 13 public sector banks, led by SBI (See: Banks moving to get Kingfisher, Mallya declared wilful defaulters).

The Department of Financial Services, after reviewing top 50 Non Performing Accounts (NPAs) of public sector banks, has asked the state-owned banks to initiate action against those defaulters (NPAs by top defaulters like Kingfisher under deep scanner).

Kingfisher Airlines has an outstanding debt of about Rs4,022 crore to the consortium of banks.

United Bank of India, part of the consortium, has already initiated the process to declare the company a willful defaulter.

Once a company is declared wilful defaulter, criminal proceedings can be initiated against promoters and directors of the company. Besides, they would not be allowed to raise fresh funds from banks and set up new ventures for five years.