CBI probe into IDBI Bank loan to Kingfisher Airlines

The Central Bureau of Investigation (CBI) has served an inquiry notice on IDBI Bank over a loan of Rs.950 crore it extended to Vijay Mallya-led troubled airline Kingfisher Airlines, saying this extent of exposure was not bona fide.

The probe agency's notice to IDBI comes days after it arrested the chairman and managing director of Syndicate Bank S.K. Jain for allegedly accepting bribes from some companies, notably Bhushan Steel, to hike their credit limits without basis.

"The notice to IDBI Bank pertains to a PE (preliminary enquiry) into its role on a loan to Kingfisher Airlines -- how it (the bank) sanctioned Rs.950 crore, when the airline's net worth was negative," a CBI officer told IANS.

"This was also the bank's first exposure to the airline. There was no need for the bank to have taken such an exposure that, too, outside of the consortium when the loans of other banks were getting stressed," the officer said, requesting anonymity.

Asked to respond, IDBI Bank Chairman and Managing Director M.S. Raghavan said: "We are aware of this particular case. In the latest notice, the CBI has sought replies to certain queries as part of ongoing investigations to which we shall reply in the next few days."

He said such responses were sought and given even in the past.

"We have nothing to hide. The loans were extended as part of the consortium or multiple banking, after making thorough appraisals, as required," Raghavan added.

The airline, which has suspended operations since October 2012, owed its consortium of banks led by the State Bank of India as much as Rs.7,500 crore.

Last week, the CBI not only arrested Syndicate Bank chief S.K. Jain for allegedly accepting bribes but also some others in this connection, including Ved Prakash Agarwal of Prakash Industries and Neeraj Singhal of Bhushan Steel.