28/01/2017 1:51 PM IST | Updated 28/01/2017 3:32 PM IST

This Bank Allegedly Bent Rules, Ignored RBI Guidelines And A ₹6000 Cr Debt To Lend Vijay Mallya ₹950 Crore

Let your mind be blown away.

Ahmad Masood / Reuters

Following IDBI Bank chairman Yogesh Agarwal's arrest earlier this week, it has come to light how the bank literally threw the rule-book out of the window to facilitate a grand scam, allegedly orchestrated by Vijay Mallya.

According to Mumbai Mirror, Mallya approached IDBI for a loan of ₹950 crore in 2009. At that time, he had a debt of ₹6000 crore already. Mirror, which accessed the CBI chargesheet, reported that not only was Mallya buried under the gigantic debt amount, he had defaulted in IDBI's own credit facilities.

Quoting the CBI chargesheet, Mirror reports: "The airline had reported a loss of ₹687 crore the previous fiscal, and by 2009, the losses had multiplied to more than ₹2,000 crore. According to the charge sheet, the first chunk of the loan (₹150 crore) was sanctioned after just two meetings between Aggarwal and Mallya, and disbursed between October 9 and 14, 2009 (within a week of application)."

The report also states when A Raghunathan, Kingfisher Airlines' former CEO, who has now been arrested, approached the bank for the disbursement for the first chunk of the loan, he didn't provide any supporting documents. The company just stated they needed the money to pay off overseas vendors, whose details weren't provided. Yet, the loan got passed. Not just that, despite the mounting losses and debts, the ratings of Kingfisher Airlines were reportedly increased with no valid reason in an internal assessment by the bank, way beyond the same bank's risk rating committee's recommendation.

A report on NDTV says that the bank also ignored the Reserve Bank Of India's guidelines while extending the loan to Mallya.

NDTV reports: "CBI sources also claim that ₹263 crores, which was a part of the loan, has been diverted out of the country and used to pay up previous loans of Kingfisher."

The same report states that in November 2009, the credit committee of IDBI was supposed to meet Mallya and Kingfisher Airlines' representatives, to discuss the loan the company had sought. "For that Kingfisher had to pledge its unencumbered shares, a mandatory condition to get the loan," the report states. However, like stated above, Mallya allegedly mailed his CEO saying it was not required and he had already discussed the details with concerned people. The loan, too, was disbursed soon after.