The beleaguered liquor baron Vijay Mallya’s offer to pay Rs.4,000 crore out of Rs.9,000 crore pending debt conveys his “intention” to repay the loan, and the public sector lenders should consider it carefully, industry organisation Assocham has said.
“The default to be categorised as ‘wilful’ must be intentional, deliberate and calculated. Once it is established that the borrower intends to repay, the default cannot be deliberate,” Associated Chambers of Commerce and Industry of India (Assocham) secretary general D.S. Rawat said in a statement on Saturday night.
With excessive focus on the “wilful defaulters”, the India Inc. is being projected in a bad light in the eye of the general public, whereas the fact remains that they contribute a large part to the country’s Gross Domestic Product (GDP) and employment generation, Rawat said.
In business cycles, “difficult times do come about. At times, the entrepreneurs face a crisis-like situation despite best of efforts,” he said.
“With so much shrill noise on the ‘wilful’ defaulters, the banks and the government should take a dispassionate view of the case rather than being influenced by the media reports, which at times get exaggerated in the ‘right-or-wrong’ debate,” the Assocham secretary general added.
In the case of Kingfisher Airlines and Mallya, “let there not be a media and public trial as such a thing is not good for the industry, banks or even the country’s financial system,” he said.
The main concern for the banks should be recovery of their assets, which have become non-performing assets (NPAs) and all genuine efforts must be made towards that end, the Assocham top official said.
“Whether Mr Mallya has done something right or wrong should be left to the law enforcement agencies and the courts. The banks must evaluate with open mind what offer is on the table,” he said.
On the hindsight it does look as though the Indian industry, as was the case with the rest of the world, did over-step in expansions of capacities, stretching their balance sheets with high debts.