Examining legal implications involved in Airbus issue: UBI

The bank is looking at legal implications involved in the Airbus issue and has been examining the possibility of referring it to ESMA, Narang said.

Below is the transcript of Deepak Narang's interview with Sonia Shenoy & Anuj Singhal on CNBC-TV18.Sonia: Can you give us an update on what exactly is the amount of advance from Airbus?A: An order was passed by the Debts Recovery Tribunal (DRT) Bangalore, where we have filed a case. We have given money to Airbus on behalf of Kingfisher Airlines. It is accepted by then that they have taken money and they have not delivered the aircraft, so they need to return the money to us. It’s very unethical on their part to have accepted money from us, kept money with them, not delivered the aircraft. This is a foreign exchange which has gone out of the country and they need to return back that payment. European Securities and Markets Authority (ESMA) is the authority which looks into all those ethical parts of dealing of Airbus. We may think of referring it to ESMA.

Sonia: When will you refer it to ESMA and how much is the money involved?A: Three banks are involved; Oriental Bank of Commerce (OBC) is the lead bank, my bank and Corporation Bank. An upwards of Rs 200 crore is involved in that. We are just examining the possibility of referring it to ESMA. We will examine the implications of it, legal issues are involved, we will look into that.Anuj: What is the latest on the Kingfisher issue because you had declared Kingfisher as wilful defaulter but they had obtained stay from Calcutta High Court and now even UCO Bank has identified Kingfisher as wilful defaulter? What about the bigger banks. Have you had any talks with them in terms of what the future course of action is going to be?A: Yes, we are the first bank to declare Kingfisher as a wilful defaulter. Now we are looking into what to do with the case. I was asked what to do about guarantor in this case. Yes, we are examining that case also. As far as Kingfisher as wilful defaulter is concerned, interim stay is there by Calcutta High Court, November 10 is the date for hearing. They have challenged the constitutional validity. So RBI would be defending that case. We will be filing affidavit on that case. I think we have a strong case on that. All these things are very well documented and the fact that other banks have also now declared Kingfisher as wilful defaulter. Only strengthen the belief that they are a wilful defaulter.

Sonia: Out of the total exposure that you have, in the last three-six months, have you recovered any asset from Kingfisher Airlines?A: It is been done by State Bank of India, which is the leader of the consortium and they would be selling those assets and recovering money and against that winding-up which we have field against UB holdings, about Rs 250 crore is deposited at the direction of Bangalore High Court where winding-up is filed. Assets, shares were sold by the consortium and after banks had a second charge, about Rs 650 crore is left to be distributed. We may get about Rs 40 crore from there. Anuj: What about Bhushan Steel. You still classify that as standard asset, any development on that and are you worried about that or that’s not reached at that stage yet?A: Bhushan Steel is standard with us and Steering Committee of bankers is looking into that issue. As of now there is no concern. We will do what other banks do in that. We are a small player in that.Sonia: What happens to some of the directors of Kingfisher Airlines? SBI had sent a notice to Mallya as well as the other directors. Do you think eventually some of these directors would have to step-down from the board?A: We have declared Mr. Mallya and other directors as wilful defaulter. It is the corporate governance which is set in now and board should look into that. Once they have been declared as wilful defaulter, why should be on the board. It’s for the company to look at that issue. For me it is sufficient to declare them as wilful defaulter so they will not be able to get finance further.Sonia: I wanted to ask you about your exposure to Jaiprakash Associates. What is the current exposure that you have to JP Associates and is that a standard asset?A: As of now it is standard. Once we are able to sell their assets we will be able to get back our money. We have already demanded money from them. We have raised an issue. Sonia: In terms of asset quality it has been a bad last couple of quarters for you, your gross NPA still stand quite high at 10 percent. What is the way forward for the bank, any bottoming out and any recovery that you see?A: Every quarter since March, from December we brought it down in March and from June we brought it down from March figure and hopefully in September we will be down absolute amount from June figure. So, every quarter gross NPAs amount wise are coming down. We are quite comfortable on our asset quality, deterioration has been stemmed. We have reached the bottom of that. The only thing is we will go upwards and recover and NPA would come down.