The Rs. 900-crore loan extended by the IDBI Bank to Kingfisher Airlines was sanctioned by top bank officials, despite poor credit rating. The case registered by the CBI last July on a complaint by the bank says the company had moved another application for a corporate loan of Rs. 950 crore on October 1, 2009. Five days later, giving reference to Mr. Mallya’s meeting with a top IDBI official, the firm’s CFO, A. Raghunathan, requested for release of a short-term loan of Rs. 150 crore.
“On the same day, a memorandum was put up to the credit committee [comprising the then CMD and two members] and the facility was sanctioned, though the company was having negative financials and a negative net-worth..., and the borrower being a new client did not satisfy the conditions stipulated in the corporate loan policy of the bank,” says the CBI.
On November 4, 2009, Mr. Raghunathan wrote another letter giving reference of a meeting between Mr. Mallya and the bank’s CMD and sought ad hoc release of Rs. 200 crore pending sanction of the corporate loan to “meet critical obligations to overseas vendors”. The amount was later subsumed in the corporate loan.
