Do not consider Vijay Mallya’s settlement offer, finance ministry tells banks

The finance ministry has asked banks not to consider any settlement offer from Vijay Mallya, a top source told HT.

Mallya had told the Supreme Court in April that he was prepared to deposit an additional Rs 2,468 crore over and above his earlier offer of Rs 4,400 crore. A consortium of 17 banks led by State Bank of India (SBI) had lent around Rs 7,000 crore (Rs 9,000 crore with interests and penalties) to Mallya and the now-defunct Kingfisher Airlines.

“There was a feeling in some quarters that banks should accept whatever Mallya is agreeing to give. But we are certain we can recover the full amount once we extradite him,” said a top finance ministry official, who did not wish to be named.

External affairs minister Sushma Swaraj said last Sunday that an official request to the UK government for extraditing Mallya is yet to be made, as the Enforcement Directorate is yet to provide the requisite documents. Sources in the government, however, told HT on the condition of anonymity that talks for extradition has already begun at the diplomatic level, though a formal request is yet to be made.

“The process for extradition has started and the government is confident that Vijay Mallya will be brought back,” said the source quoted earlier. Banks have been directed to pursue the case in Supreme Court, while the country tries to extradite Mallya, he added.

Vijay Mallya left India on March 2 and has been seen in the UK. His exit from the country stirred a huge storm over recovery of bank loans and accusations of money-laundering.

Banks have approached the Supreme Court for recovering their dues, and a non-bailable warrant has been issued against Mallya.

Lenders had approached the finance ministry to seek the government’s advice on the settlement. However, according to finance ministry sources, accepting the settlement would mean absolving Mallya of all his dues. “Accepting Mallya’s settlement will set a wrong precedent for loan defaulters.”

“It is not just bank loans that Mallya has defaulted on, there are also tax dues, non-payment of provident fund and other issues” said the finance ministry official quoted earlier.