You are here: Home » Companies » News
Business Standard

PNB declares UB (Holdings) wilful defaulter

Company mulls legal action against decision; huge jolt for Mallya as banks are on aggressive debt recovery drive


BS Reporter  |  Bengaluru 

Vijay Mallya
Vijay Mallya

United Breweries (Holdings) Ltd, majority owned by Vijay Mallya, said Punjab National Bank has declared the company a “willful defaulter”.

“The company is in consultation with its legal counsel to challenge the decision by taking appropriate legal action that may be required in this regard,” Bengaluru-based United Breweries (Holdings) said in a stock exchange filing on Tuesday.

The latest jolt for Mallya comes as banks, under pressure from regulators and the government to clean up their balance sheets, are aggressively pursuing their debtors to recover dues.

State Bank of India has already declared Mallya a wilful defaulter, after talks to get the UB Group chairman to clear debt of Rs 8,700 crore to a 17-bank consortium failed. Mallya had pledged his shares in United Breweries, United Spirits and United Breweries (Holdings) to banks, against which loans were given to Kingfisher Airlines. The UB (Holdings) stock was trading at Rs 20.20, lower by 11 per cent at 1.35 pm on the BSE.

With banks acting tough, Mallya is under pressure to salvage his pride, even as he has lost the bulk of his empire to global multinationals, Diageo and Heineken.

On Tuesday, UB (Holdings) said it planned to go to court against PNB’s decision.

Diageo and Heineken now control the majority stakes in United Spirits and United Breweries, respectively.

Both firms are aggressive in India as they tap into a young population and a growing economy.

In November, YES Bank unilaterally invoked 3.02 per cent of the shares to secure loans given to UB group companies. Last week, SBICAP Trustee Co initiated the process of selling Kingfisher House, the headquarters of the defunct airline, to recover dues.

Punjab National Bank (PNB) Managing Director Usha Ananthasubramanian on Tuesday said: “When people have the wherewithal to pay, they must pay. There are people who have money, yet they don’t want to pay.”

“Wilful defaulters also blocks your (banks as well as general public) access to finance,” Ananthasubramanian told PTI.

“We have also filed recovery suit in the DRT (debt recovery tribunal) and all the legal steps have to be taken,” she added.

PNB declares UB (Holdings) wilful defaulter
Wilful defaulter tag has given after a due process, the PNB chief said, adding that as per the Delhi High Court order, these defaulters were allowed to be represented before the Committee constituted by the bank through their legal representatives.

“After hearing the representatives, the Committee declared them as wilful defaulters according to RBI guidelines,” she said.

According to RBI guidelines, once declared as wilful defaulters, no additional facilities will be granted to these borrowers by any bank or financial institution.

Besides, such companies and promoters) will be debarred from institutional finance for floating new ventures for a period of five years from the date of removal of their name from the list of wilful defaulters.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, February 17 2016. 00:33 IST