India's Finance Minister Arun Jaitley has warned wilful defaulters to settle their dues honourably with the banks or else prepare to face “coercive action” by lenders and investigative agencies. “I don't want to make any comments on individual cases but I think it's a responsibility of large groups to honourably settle their dues with the banks,” he said in an interview.
Jaitley also said that banks have certain collaterals of group companies of Vijay Mallya and will take legal action to recover dues that exceed £900 million. “Banks have some securities. Banks plus other agencies have also coercive methods available with them through legal enforcement... these are all being investigated by relevant agencies.” Vijay Mallya had left India days before the Supreme Court heard a plea from a clutch of state-owned banks seeking recovery from his group firms. Mallya and Kingfisher Airlines owed £780 million to a consortium of 17 lenders led by State Bank of India, with an exposure of over £160 million to the now defunct airline.
The finance minister said the government has been trying to address the problem of NPAs in sectors such as steel, textile, highways and infrastructure, which are on account of economic slowdown. “I think the NPA resolution process will now begin. The sectors which have caused distress... I have always said that there are two kinds of NPAs. One is because of economic environment, the losses in certain categories of industry. Now those areas we are trying to address,” he said.
Govt not to coerce Vodafone, Cairn
Jaitley said that the government would not “coerce“ companies like Vodafone and Cairn Energy to avail of its one-time offer to settle their retrospective tax cases and it was for them to decide. The option before such companies was either to accept the offer of paying principal tax amount and get waiver from interest and penalty, or continue litigation, he said.
“This is an alternate route which I have suggested. The option is theirs. Nobody is being coerced to accept one route or the other,” he said. The government, he said, has no issues with companies not wanting to accept the offer and continue litigation. “If they want to continue with the litigation, so be it... the outcome of the litigation will determine (the fate of tax demand).” Asked about the tax notices sent to Vodafone and Cairn last month despite the issue being under arbitration and government commitment not to create fresh demand using retrospective tax law, Jaitley said notice would go if there are pre-existing assessment orders.
