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Bank issues public notice with photograph in Reid & Taylor default case.
India Inc’s leading lights are used to seeing their photographs in newspapers. But it’s probably the first time a bank in India has published the photograph of a prominent industrialist in a public notice, terming him a defaulter.
In an advertisement in prominent dailies, UCO Bank has issued a notice against Nitin Kasliwal, chairman and managing director of S Kumars Nationwide Ltd (SKNL), who is the guarantor of a Rs 110.07-crore loan taken by Reid & Taylor, the fabric and apparel arm of SKNL. The advertisement carries Kasliwal’s picture as well.
The move, bankers said, was part of the “name and shame” policy to make borrowers pay their dues. State Bank of India took the lead recently by publishing photographs and other details of five wilful loan defaulters who had taken export credit of Rs 3 lakh each and had not paid up. But the issue was much smaller than Reid & Taylor’s.
Kolkata-based UCO Bank has already classified the loan as non-performing asset (NPA). “In spite of repeated reminders, request and persuations, the borrower has not liquidated the liabilities of the bank,” UCO said in the notice, adding the ad had been issued in public interest. The notice warns the public at large to “exercise caution while dealing with the said director, guarantor and company in any manner”.
A UCO bank official said the company had not been responding to reminders to pay the dues. “Giving notice along with the photo of guarantor is an extreme step after using all normal means to ensure timely servicing of loans,” the official said.
Meanwhile, two non-executive directors on the board of SKNL, J Balakrishnan and Dara D Avari, resigned from the board. A top official with IDBI Bank, which also has exposure to Reid and Taylor, said there were delays in repayment, but it was a performing account as of now. “The fact that one bank has gone public with disclosure will affect the liquidity of the company further,” he said. Bank of India, another lender to the company, said all banks would go in for a coordinated action on the issue.
Corporation Bank CMD Ajai Kumar said it (Reid and Taylor) was a non-performing asset and the bank was initiating legal action for recovery of Rs 75-crore exposure. Mumbai-headquartered Reid & Taylor India and its fabrics factory located at Nanjangud, Karnataka, took loan from the Mumbai corporate branch of UCO Bank against hypothecation of 35 acres of land in Nanjangud and on the personal guarantee of Kasliwal, the bank said in the notice.
An email to Kasliwal did not elicit any response.
Reid & Taylor which once had Bollywood superstar Amitabh Bachchan as its brand ambassador, had plans to go for an initial public offering of Rs 1,000-crore in 2010-11, but the plan had to be shelved due to the poor market situation.
According to recent reports, SKNL - the stock price of which has fallen 84 per cent from Rs 43.50 on January 4, 2010, to Rs 6.83 now - plans to raise about Rs 600 crore by selling shares of its Reid & Taylor arm through a qualified institutional placement.
Image: A salesman displays suit fabrics for customers at a store in Mumbai. | Photograph: Punit Paranjpe/Reuters
(With inputs from Krishna Pophale)
