India probes bank loan to Kingfisher

August 11, 2014 - 12:00:00 am

NEW DELHI: India’s top crime fighting body is investigating a $155m loan by a state-run bank to debt-ridden Kingfisher Airlines, a police official said yesterday.

The Central Bureau of Investigation (CBI) was conducting an initial probe into why the Rs9.5bn ($155m) loan from the IDBI bank was approved given Kingfisher’s levels of debt. “When the company was in the red why did the IDBI bank give the loan?” CBI spokeswoman Kanchan Prasad said.

Kingfisher, owned by India’s liquor baron, the flamboyant Vijay Mallya, owes nearly $1.5bn to banks, airports, fuel suppliers, staff and others.

The low-cost airline, which did not make any profit since it started operating in 2005, lost its licence to fly two years ago, after it failed to end a strike by staff including over a failure to pay wages. Owners of Kingfisher’s grounded planes have taken them back.

Prasad said the CBI had carried out a “preliminary enquiry” into the loan over the past two months. The next step could be the filing of a formal case.