State Bank of India on Wednesday said that a loan recall notice has been served on the defunct Kingfisher Airlines (KFA) on behalf of the consortium of 17 lenders.

“We have served the loan recall notice. The notices under the Sarfaesi Act, DRT and other processes will follow.

“Also, the recall notice was served just yesterday, so it will be very difficult to estimate the time that the recovery process will take,” Shyamal Acharya, Deputy Managing Director, Mid-Corporate group, State Bank of India, told newspersons on the sidelines of an event hosted by Gems and Jewellery Export Promotion Council.

Sarfaesi (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act and DRT (Debt Recovery Tribunal) are two routes that lenders can resort to for recovering bad loans.

KFA, the airline promoted by Vijay Mallya, owes about Rs 7,000 crore to lenders. SBI as the consortium leader has the maximum exposure to Kingfisher at Rs 1,800 crore.

Pledged shares

Banks have already sold around 7.3 lakh of the 26 lakh United Spirits shares pledged with them by Mallya, who is also the promoter of United Spirits, a subsidiary of United Breweries Holdings.

Acharya refused to disclose the amount of money that banks have realised so far from the sale of shares. However, a senior official informed that the average realisation is about Rs 1,900 a share. Banks have already sold all the shares of Mangalore Chemicals and Fertilisers pledged by Mallya, realising around Rs 100 crore.

Reacting to Tuesday's Bombay High Court order of no interim relief to KFA-promoter, Acharya said the lenders will continue to sell the shares in tranches.

Diageo deal

Concerns that the USL share sale by banks might hurt Mallya’s plans to sell his stake in the liquor company to Diageo (for about Rs 11,000 crore), Acharya said, “We are not a party to the deal and we cannot wait. There is no stay (from the court on selling of shares) and so there is no reason we will not do that.”

Also, it also would not be feasible to participate in the open offer as the price is set at Rs 1,440 a share by Diageo to acquire USL. The current market price of USL is much higher than the open offer price. The USL shares on Wednesday closed down two per cent at Rs 1,822.60 on the Bombay Stock Exchange.

The open offer commences on April 10.

According to Acharya, the core group has given a floor price to be protected in the share sale, but refused to share the same.

“SBICAPS Trustee is the trustee of the shares… they have been given a floor-price (by the core group). They are selling in lots and we have got good prices so far," he said.

However, a senior official at SBICAP Trustee denied that any floor price has been set.