Business News

Mallya offered to pay back 80% of principal loan amount but banks rejected it, claims defence

Citing a lavish party the businessman had thrown, the prosecution said banks may have rejected his offer as they knew he could repay the full amount.

Hearings in businessman Vijay Mallya’s extradition trial continued at the Westminster Magistrates’ Court in London on Thursday. Mallya’s defence claimed that a group of banks, led by the State Bank of India, rejected his offer in 2016 to pay back nearly 80% of the principal loan amount he owed them, PTI reported.

The United Kingdom’s Crown Prosecution Service, which is arguing the case on behalf of Indian authorities, countered that it could have been rejected because the banks knew that Mallya could pay back the entire amount.

Mallya is wanted in India for a number of cases, including for defaulting on loans worth Rs 9,000 crore from 17 banks. The businessman, who has been in Britain since March 2016, had said he would not return to the country.

India’s Ministry of External Affairs had submitted an extradition request to the United Kingdom on February 9. The request was made on the basis of an extradition treaty signed between the countries in 1992.

Mallya’s counsel Clare Montgomery deposed banking expert Paul Rex on Thursday, and asked him if the banks should have “dismissed out of hand” Mallya’s offer to pay back around Rs 4,400 crore of the principal debt amount.

“A commercial bank would assess such an offer against other routes of repayment,” Rex said, observing that such an offer would have helped the banks avoid further loss.

Crown Prosecution Service’s Mark Summers argued that the banks could have rejected the offer for many reasons, and cited a party costing £2 million (around Rs 17.39 crore) that Mallya had thrown, implying that he had more than enough money to repay the lender organisations if he had wanted to.

Rex also described the credit analysis done by banks before granting loans to Mallya’s now defunct-Kingfisher Airlines in 2009 as “superficial”, according to ANI. He said that there were “glaring gaps” in the process. IDBI Bank, Rex said, had relied on information that was insufficient and was “merely reproduced” data that Kingfisher had already provided other banks.

The prosecution had on Monday told the court that the liquor baron had misled IDBI Bank in India in 2009 about his company’s net worth. Mallya, Summers had said on Tuesday, attempted to stash his money away when a consortium of lender banks recalled the loans.

The trial is expected to continue on Monday.

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