The State Bank of India Ltd. logo is seen at a branch in Mumbai (Photographer: Dhiraj Singh/Bloomberg)

SBI Denies Laxity In Dealing With Vijay Mallya Loan Default Case

State Bank of India Ltd. denied on Friday there any laxity on its part in dealing with the loan default by now defunct Kingfisher Airlines Ltd. of fugitive liquor baron Vijay Mallya.

The comments come after reports suggested that the bank—which was the lead lender to Kingfisher Airlines—was in Feb. 2016 advised to move the Supreme Court to stop Mallya from fleeing the nation but the lenders moved to the Supreme Court only after the tycoon had left the country four days later.

Mallya fled on March 2, 2016 while 13 banks moved the apex court four days later seeking intervention to prevent the businessman's flight.

“SBI denies that there has been any laxity on its part or its officials in dealing with loan default cases, including Kingfisher Airlines,” the lead bank said in a statement. “The bank has been taking proactive and strong measures to recover the defaulted amounts.”

Mallya has been facing legal proceedings for defaulting on loans over Rs 9,000 crore from a consortium of 17 banks.

However, Mallya, in an open letter, had defended himself and said the SBI and other banks had lent him money despite knowing about his company's financial situation. He claimed he was being made the poster boy for bank defaults, though the banks were also culpable.

The Supreme Court had raised unsavoury questions to the banks. It wondered why loans were given to Mallya when he was already a defaulter and was facing proceedings in the court of law.

Mallya had already announced his intention to shift to the U.K. in a statement issued after his deal with Diageo to step down from the chairmanship of United Spirits Ltd., a company he sold to the U.K. major three years ago. He was to get Rs 515 crore or $75 million from Diageo as severance package.

SBI, in the first week of March 2016, moved the Debt Recovery Tribunal in Bangalore claiming the first right on the payment by Diageo to Mallya and seeking to impound his passport. However, the tribunal reserved its order and set the next hearing for March 28, 2016—a good 21 days later.