India's top lender moves court seeking arrest of Vijay Mallya, ex-chairman of Diageo company United Spirits

Within less than 10 days of London-based Diageo agreeing to pay $75 million to UB Group promoter Vijay Mallya to exit from Diageo-owned United Spirits, India's biggest lender State Bank of India (SBI) has moved a debt recovery court seeking Mallya's arrest and seizure of his passport to recover Rs 7,800 crore that he owes to certain Indian lenders, mainly state-owned banks.

SBI, which heads a consortium of 17 lenders that lent money to UB Group company Kingfisher Airlines (KFA), moved the Debt Recovery Tribunal (DRT) in Bengaluru against Mallya in order to recover the money from him, PTI reported. 

The agency, quoting sources, said that SBI has approached the DRT for getting Mallya's passport impounded and getting him arrested, in addition to "securing the lenders' first right on the payout from Diageo and getting full disclosure of his assets in the country and abroad."

Mallya and KFA together owe about Rs. 7,800 crore to the consortium, of which SBI's share is about Rs. 1,600 crore. KFA has been grounded since October 2012 for defaulting on loan repayments.

Earlier, on Feb. 11, another state-owned bank, Punjab National Bank, had declared another UB Group company, United Breweries (Holdings), "wilful defaulter" as part of its crackdown on borrowers who had failed to repay loans to the bank.

KFA owes Rs 1,600 crore to PNB, which published a list of about 900 defaulters who owe it about Rs 11,000 crore.

United Breweries (Holdings) and Vijay Mallya had stood guarantors for the loans taken by KFA.

Shares of United Spirits, United Breweries (Holdings) and United Breweries were trading down on Indian stock exchanges on Thursday. United Sprits was down 2.13 percent at Rs 2,454.85, United Breweries (Holdings) was trading at a loss of 3.91 percent at Rs 20.90 at around 12.50 p.m. 

Vijay Mallya owns IPL cricket team Royal Challengers Banglore (RCB), which has New Zealander Daniel Vettori as the head coach and the likes of Virat Kohli, Shane Watson, AB de Villiers and Chris Gayle in its 26-member squad for IPL 2016.

The deal with Diageo also provides for sponsorship of Force India Formula 1 team, the company said in its statement on Feb. 25, 2016.

"The financial terms of today's agreement with Dr Mallya provide for a payment of $75 million (approximately £53 million) to Dr Mallya over a five year period...Diageo has also extended Smirnoff's sponsorship of the Force India Formula 1 team of which Dr Mallya is team principal and part-owner for the next five seasons. The cost of this sponsorship continues to be $15 million (approximately £11 million) per season."