NEW DELHI: While approving the extradition of former liquor baron Vijay Mallya to India, the 74-page ruling of Chief Magistrate Emma Arbuthnot of UK’s Westminster Magistrates’ Court had some scathing remarks about the Indian banking system, particularly IDBI, which had granted Mallya the loans which he defaulted on.
“This is the most difficult decision of the ones I have to take in the case,” she says in a chapter titled ‘Analysis and conclusion in relation to a conspiracy involving some at IDBI’.
There was no doubt that “there has been a catalogue of failures of the bank at different levels”, both before and after the loans were sanctioned, she said. But whether it was by design, or a “case of a bank who were in the thrall of this glamorous, flashy, famous, bejewelled, bodyguarded, ostensibly billionaire playboy who charmed and cajoled these bankers into losing their common sense and persuading them to put their own rules and regulations to one side”, was a difficult question to answer based on the evidence provided, she wrote. However, the bank failed “to abide by their own rules when it came to a new client and an example of this was that despite the low rating the loan was waved through.
“In fact the first loan was granted even before the risk rating had been carried out....With a bit of care, the worthless negative lien on the hire purchase aircraft would have been exposed. IDBI, if it had looked more carefully at the loan account, would have been able to see where the money was going,” she further wrote.
“Amidst all this jubilation over the court ruling,” an Indian official remarked, “we should not ignore these remarks which cut to the bone of the flaws in the Indian banking system. If we do, the celebrations will last only until the next defaulter comes along.”