State Bank of India has moved loans to Kingfisher Airlines in category of write-off
Highlights
- State Bank of India writes-off 1,200 crores in dues owned by Vijay Mallya
- Loans moved to 'Advance Under Collection Accounts', giving up on recovery
- Write-off doesn't mean forgiving loans, Arun Jaitley said
Around Rs 1,200 crore in dues owed by Vijay Mallya's collapsed Kingfisher Airlines has been labelled a write-off in the books of India's largest bank, the State Bank of India.
The bank said the Kingfisher loan has been moved, along with other bad loans, to a category called AUCA or "Advance Under Collection Accounts", which allows them to take the bad debt off their books while keeping alive the option of pursuing its recovery.
Confronting an opposition attack in parliament, Finance Minister Arun Jaitley asserted that the loans had not been waived.
"It only means that in accounting books, it is listed as a non-performing asset. A write off doesn't mean forgiving loans. The loan will still be pursued," Mr Jaitley said in the Rajya Sabha.
Debating the stress caused to the public by the sudden ban on Rs 500 and Rs 1,000 notes, Left lawmaker Sitaram Yechury had questioned the SBI write-off to Mr Mallya while the government claims to crack down on black or untaxed money.
In effect, Mr Yechury said, "it is something that is not going to be realized."
Mr Jaitley then shot back that the Kingfisher loan was one of the legacies that his government had inherited. "(Kingfisher's) liability to pay still exists," he emphasized.
A former chairman of SBI told NDTV that parking loans in the AUCA category is a sign that the bank has more or less given up hope of recovering the Kingfisher money.
All the lenders to Kingfisher, including the State Bank, have struggled to recover close to Rs 6,000 crores loaned to the defunct airline, a task made all the more complicated by the absence of Mr Mallya. The liquor baron quietly flew to London in March, chased by banks as well as investigating agencies over allegations of financial fraud.
To recover some of the money, the State Bank has tried to auction Mr Mallya's property.
Among the assets pledged as collateral is the flamboyant businessman's luxurious Kingfisher villa in Goa, which the bank has yet to find a buyer for.