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OP Bhatt, other SBI staff under CBI lens for loans to Vijay Mallya

, ET Bureau|
Oct 12, 2018, 06.50 AM IST
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What has raised suspicions is that no “forensic audit” was done by the consortium of banks despite being aware of the “poor financial health"
NEW DELHI: The Central Bureau of Investigation (CBI) is examining the role of top State Bank of India (SBI) officials in disbursing loans to businessman Vijay Mallya — whose extradition is being sought from the UK — allegedly without conducting due diligence. Mallya is wanted in India for questioning over allegations of fund diversion and money laundering regarding loans made to Kingfisher Airlines.

Former SBI chairman OP Bhatt along with more than a dozen senior officials of the lender are under the CBI scanner, people with direct knowledge of the matter told ET. Bhatt was chairman between 2006 and 2011. The others worked at SBI branches in Bengaluru and Mumbai and held posts such as deputy manager, group executive, assistant general manager, credit analyst, relationship manager.

What has raised suspicions is that no “forensic audit” was done by the consortium of banks despite being aware of the “poor financial health” of Mallya’s companies, said one of the persons cited above. The investigation shows that loans were given on the basis of “promises” and “imaginary claims” made by Mallya, he said.

Emails from Mallya and three top Kingfisher Airlines employees to then joint secretary, banking, Amitabh Verma, are also likely to find mention in the agency’s charge sheet, which is being prepared, said the people cited above. Most of emails appeared in the public domain last year when the agency filed a charge sheet against Mallya and others in the IDBI case. These indicated that Mallya was “assured” that “pressure” will be exerted to ensure that loans are disbursed, said one of the people cited above.

The three employees are United Breweries Group CEO Ravi Nedungadi, United Breweries Holdings Ltd managing director Harish Bhat and Kingfisher Airlines CFO A Raghunathan.

ETwas the first to report on August 1 that CBI was preparing acharge sheetin the case pertaining to loans of more than Rs 6,000 crore to Kingfisher Airlines by a consortium of 17 banks led by SBI. The banks are seeking more than Rs 9,000 crore after adding penalties.

A first information report (FIR) was registered against Mallya in August 2016 on the complaint of SBI, which had an exposure of Rs 1,600 crore. PNB and IDBI Bank have an exposure of Rs 800 crore each, followed by Bank of India at Rs 650 crore, Bank of Baroda at Rs 550 crore and Central Bank of India at Rs 410 crore. Kingfisher Airlines had taken loans of Rs 6,900 crore from a consortium of 17 lenders in early 2010 after a second round of debt restructuring. Of this, the lenders, which recalled the loans in February 2013, could recover only about Rs 1,100 crore after selling pledged shares of Mallya’s UB Group companies.

Mallya left the country on March 2, 2016, the day on which the banks moved the Debt Recovery Tribunal. The UK court hearing the extradition proceedings will deliver its judgement on December 10.
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