Whiskey chaser

11 March 2016 By Una Galani Follow @ugalani

Lenders are chasing Vijay Mallya’s $75 mln payout from distiller Diageo as they try to recover debt from his defunct airline. India’s new tough stand on errant borrowers comes too late to fix the country’s bad debt problem. But it offers hope that past mistakes won’t be repeated.

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Indian Finance Minister Arun Jaitley told parliament on March 10 that the country’s banks will take every possible action to recover the debt from tycoon Vijay Mallya and other defaulters.

“As far as the government is concerned the clear instructions are that the banks must go all out to take every possible action,” he said, adding there were some cases of “wilful default even bordering (on) fraud”, Jaitley said.

Mallya left India amid pressure from banks to repay more than $1 billion of debt owed by his collapsed Kingfisher Airlines, a lawyer for the lenders told the country’s top court earlier in the week.

A group of state-run banks, led by State Bank of India, had asked courts to stop Mallya from leaving the country. Mallya had guaranteed the Kingfisher Airlines loans.

Mallya had no intention of running away from creditors and was in talks with them for a one-time settlement of the Kingfisher debt, he said in a statement sent to Reuters Breakingviews on March 6.

Last month, Mallya agreed to resign from United Spirits, a unit of UK distiller Diageo. In return, the British drinks group agreed to pay the tycoon $75 million over five years.

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