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PNB declares Mallya’s UB (Holdings) willful defaulter

Punjab National Bank has declared United Breweries (Holdings) Ltd, majority owned by Vijay Mallya, as a “willful defaulter”.  PNB Managing Director Usha Ananthasubramanian said: “When people have the wherewithal to pay, they must pay. There are people who have money, yet they don’t want to pay.”
UB Holding has been declared as will full defaulter on the ground that it has deliberately not paid though it has sufficient cash flow and good net worth.

Before PNB, several other banks, including SBI, had declared the company as willful defaulter. The latest jolt for Mallya comes as banks, under pressure from regulators and the government to clean up their balance sheets, and so they are aggressively pursuing their debtors to recover dues.

Recently, Supreme Court of India also demanded the list of high worth defaulters from RBI.
What is willful defaulter?

According to RBI, a willful defaulter is person who

  1. Defaults despite having the capacity to repay his dues
  2. Defaults and has not used the money for the specific purpose for which the loan was availed
  3. Defaults, has siphoned off the funds, and the money is not available with him in form of other assets
  4. Defaults and has disposed the assets given as security against the loan without informing lenders

A company is declared will full defaulter after giving proper and sufficient time to the company to explain its constraints.

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