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'Mallya has offered to pay the original amount.'
'Let us say he means the principal amount and that stands at Rs 5,000 crores.'
'The Indian banks have to ask themselves if they would rather have this 5,000 crores or would have none of it at all,' asks Sudhir Bisht.
Vijay Mallya, the flamboyant Rajya Sabha ex-member and one-time liquor baron, is now a fugitive who faces extradition to India from his current sanctuary in the United Kingdom.
The guy whose Kingfisher beer could be termed as one of the most respected brands in the world is now reduced to an object of mockery and ridicule by most Indians.
People of India are angry that Mallya, the rich man who was surrounded by very beautiful women all the time, ran away from India after defaulting on huge bank loans.
But the deserter has sought to redeem himself.
Last week, Vijay Mallya offered to pay back 100% of all that he originally owed to the Indian banks. As expected, his tweet was met with disdain and contempt from the twitterati, from both first class and the cattle class.
I am not surprised by the reaction of the media and the masses. Both are quick to laud upstarts and even quicker to scorn when the super achievers fall. Anyone who made it big once is ridiculed with vehemence when s/he falls on bad times.
Publicists, columnists, media moguls, loud anchors, small-time reporters, ministers, Opposition leaders, everyone who enjoyed the cruise parties thrown by Mallya seem to have nothing but contempt for him.
If Mallya is extradited, the government of the day will tom-tom it as their greatest badge of honour.
If the guy is not extradited, the Opposition will continue to rant against the government for its failure to bring him back to India and putting him in jail.
I for one have not liked Mallya for his extravagantly ostentatious lifestyle. His spending millions on producing the bikini calendars and his regular Page Three pictures partying with nubile playmates made me sick, with envy and its resultant anger.
His pretentious and pompous lifestyle made him an object of aversion to millions of underachievers like me. Why couldn't the man live a simple lifestyle like the one lived by the darling billionaire of the country -- Mukesh D Ambani?
If you take away the glitzy, swanky and extravagant Antilia from Mukesh, the senior Ambani seems to be a reclusive and benevolent billionaire, working relentlessly just to make his shareholders richer.
On the other hand, Mallya has been the completely opposite of MDA. There are no stories about how he built his beverage company into money-spinning enterprises. There is hardly any story on the strategy around the launch of Kingfisher.
The only stories built around Mallya are about his jet-setting lifestyle, his beach parties and his mega events.
The logic that the businesses that he handled, liquor and larger-than-life airlines, demanded organising of sleek, shiny, ritzy events, never found favour with anyone.
Vijay Mallya was a hate figure for us Indians, except for PR companies and event management companies, newspaper companies, the hotel industry and the entertainment industry who made lots of money from his lifestyle events.
I have seen Indians flying Kingfisher Airlines on the Delhi-Dubai route at the price of a Delhi-Chandigarh ticket, eating five-course meals at the Kingfisher airport lounges and yet abusing the man who gave them the time of their life.
Vijay Mallya's ostentatious lifestyle and his constant media gaze became his undoing.
The stupid anchors on dim-witted news channels who disparage Mallya's offer to pay the banks the '100%' amount he owes to the banks perhaps don't even know the figure that corresponds to the 100% offer by the wily Mallya!
Nor do I, in terms of the exact amount of Indian rupees that represent the '100%'.
What I know, however, is that Mallya is offering to pay back 100% of the principal amount that he owes to the banks.
Let me also say here that Mallya as a person doesn't owe Indian banks any money at all. It is his company, the beleaguered Kingfisher Airlines, that owes the Indian banks a few thousands of crores of money.
To quote a figure from The Mint, Kingfisher Airlines owed Indian banks around Rs 7,000 crores (Rs 70 billion).
Reports in other esteemed newspapers reveal that Kingfisher Airlines's original default to 17 Indian banks was around Rs 6,000 crores (Rs 60 billion) till March 2016, but has now swelled to about Rs 10,000 crores (Rs 100 billion), with the addition of interest payable on the original loan.
Mallya has now offered to pay the original amount. Let us say that he means the principal amount and that stands at Rs 5,000 crores (Rs 50 billion). The Indian banks have to ask themselves if they would rather have this 5,000 crores (my guess about the principal amount), or would have none of it at all.
What happens if Mallya is extradited to India, is jailed and the banks are able to recover about only Rs 5,000 crores after a wait of several years?
Would it not be a bigger loss for the banks?
What about the time value of money?
Why should the depositors who fund all the loans of Indian banks be deprived of at least Rs 5,000 crores that is on offer right now?
What is Mallya expecting for returning the principal amount that he owes to Indian banks?
From his tweet, he is expecting nothing. Let me imagine a situation wherein the fugitive businessman is negotiating with the Indian government that he will not be put in jail if he returns the principal amount and comes back to India.
Even this situation is better than a situation where Mallya stays put in England and the Indian banks get no money at all.
The interest will keep swelling and the banks will have to write off all the monies after five years. This will be a disastrous situation to be in for the banks.
A payment of Rs 5,000 crores in the bank, or any other figure that would represent the principal amount, has the potential to double itself in nine years, at a compound interest rate of 8% per year.
But this is possible only if we start treating the loans given to business houses as business transactions and not attach any political motives to it.
This is possible only if we allow the public sector banks to run their affairs themselves without even an iota of interference from the mandarins of the finance ministry and the politicians who rule it.
Another point that I want to make here is that the loans by Indian banks were not given to Vijay Mallya. The loans were given to the Kingfisher Airlines Ltd that was a publicly traded company. The company had a board of directors and Vijay Mallya was the founder-promoter of the airline.
If Mallya was able to siphon off funds from the airlines, then he was not the only one guilty in this transgression. The management, the board and the auditors were equally responsible for messing up or not reporting any wrongdoing in the airline.
The airline that was launched in May 2005 was grounded in 2012. It was a culmination of wrong strategy, wrong tactics and mismanagement and people are entitled if they blame Mallya for turning a dream airline into a colossal nightmare.
But how do we explain the fact that there is no hue and cry against Air India that has sucked in more than Rs 25,000 crores (Rs 250 billion) by way of various bailout packages by various governments?
If the public is baying for Vijay Mallya's blood, why should they not be itching to kick the butt of those who own Air India?
Why this double standard for the two airlines?
As Sohrab Modi, who played the role of a Yehudi (Jew) commoner in the movie called Yehudi, famously said to the Roman emperor, 'Tumhara khoon khoon, aur hamara khoon paani? (Your blood is blood, but our blood is water?).'
I ask those who treat the Air India bailout as a national necessity and the Kingfisher loan default as an act of treachery -- is Air India's blood real blood and Kingfisher's blood mere water?
Sudhir Bisht, PhD, author and columnist writes from New Delhi and tweets @sudhir_bisht