* IDBI may join United Bank in declaring Mallya "wilful
* Mallya's grounded Kingfisher Airlines owes more than $1
By Sumeet Chatterjee and Devidutta Tripathy
MUMBAI, Sept 2 Indian lenders are increasing
pressure on liquor baron Vijay Mallya to facilitate repayment of
the debts of his Kingfisher Airlines, which has not
flown since 2012 and owes more than $1 billion to a consortium
of mostly state-run banks.
The airline founded by Mallya failed to make a profit during
the eight years from launch to the grounding of its fleet in
October 2012 and has been unsuccessful in efforts to find new
investors to revive operations.
IDBI Bank is considering declaring Mallya a
"wilful defaulter", which in Indian law would mean that he could
be forced to stand down from any corporate posts and could
damage the fundraising prospects of businesses with which he is
associated, the bank's Chairman M.S. Raghavan said.
Fellow state lender United Bank of India, among
more than a dozen banks owed money by Kingfisher, has already
made such a declaration as the nation's banks seek to address
criticism over their failure to crack down on bad debt.
Mallya, once known as the "King of Good Times" for his
flamboyant lifestyle, has until Friday to appear before an IDBI
committee to explain why he should not be declared a "wilful
defaulter", Raghavan told Reuters.
"If he is declared a wilful defaulter, then he has to resign
from all boards," Raghavan said. "... there will be lot of
pressure on him ... The companies with which he is associated as
a director cannot borrow from any bank."
Kingfisher owes 7.5 billion rupees ($123.6 million) to IDBI
Bank, Raghavan said.
Besides heading Kingfisher Airlines and his UB Group, Mallya
is chairman of United Breweries, the Kingfisher beer
maker now 38 percent owned by Heineken, and United
Spirits, which is majority owned by Diageo.
"It is not possible for a bank to simply declare anybody as
a wilful defaulter without following due process," said Prakash
Mirpuri, a spokesman for Mallya's UB Group.
"We have robust and comprehensive answers backed by
documentation to challenge any such move."
The Reserve Bank of India defines a wilful defaulter as a
borrower that is able but unwilling to pay, has diverted loan
proceeds for other than their initially stated use or has
overstated profits to obtain a loan.
Government policymakers have voiced concern about the
problem in recent months and are urging banks to get tough on
borrowers as bad loans pile up in an economy experiencing its
longest spell of growth below 5 percent in 25 years.
($1 = 60.6800 Indian rupees)
(Additional reporting by Suchitra Mohanty; Editing by David