How Indian banks recover $1bn from defaulting billionaire

Seventeen Indian banks have received 71.82 billion rupees ($967 million) by selling defaulter and former billionaire Vijay Mallya’s stake in the United Breweries Ltd.

According to a statement by the Enforcement Directorate, the shares were seized by the agency, which specialises in investigating financial crimes, after banks alleged that Vijay Mallya had defrauded them.

Mallya, who is known as the “King of Good Times” in India, was arrested in London in April 2017 and faces extradition.

The banks had accused him of willfully defaulting on more than 91 billion rupees in debt accumulated by Kingfisher Airlines, a full-service carrier he founded in 2005 that was shut down seven years later. He was said to have refused to repay the loans despite having the means to do so.

The bulk of the shareholding in United Breweries worth 58.25 billion rupees were sold on Wednesday, while 13.57 billion rupees were recovered in 2019. The remaining 8 billion rupees of shares are expected to be sold in the next two days, the ED said.

Massive bad loans have been the biggest drag on growth for Indian banks with protracted legal and regulatory proceedings adding to slow recoveries.

As well as Mallya, the ED has also seized assets under the money laundering act from two other former billionaires Nirav Modi and Mehul Choksi.

The total assets seized from the three defaulters are worth 181.7 billion rupees, about 80% of the total loss for banks, the ED said.