PSU Bank
Stressed asset fund: a pill for India's bad loans? [Representational Image]: Commuters walk past a bank sign along a road in New Delhi, India, 25 November, 2015.Reuters

The Winsome Group, the second-largest wilful defaulter after Vijay Mallya's Kingfisher Airlines, has repaid just $150,000 of the over-$1 billion in outstanding loans to Indian banks, reported the Economic Times. The remittance, which arrived recently in the backdrop of the multi-agency probe against Mallya, comes almost after a gap of two years of non-payment.

The gold and diamond house Winsome, and the group firm Forever, denied any intimidation from India's bankers' response on the Mallya debt issue. Its promoter Jatin Mehta claimed the first of the remittance came from its defaulting customers in the UAE, who had until now held back payments owing to loss in their businesses of gold and currency derivative hedging.

Winsome has filed cases against many of its defaulting customers and obtained decrees from Sharjah courts in the UAE. This remittance of $150,000 by one of its customer to Punjab National Bank in India is an outcome of this legal perseverance, said the company. Meanwhile, customers of Winsome have reportedly filed a counter-appeal against the decrees issued by Sharjah courts.

Some former officials of Winsome said Mehta had close ties with the defaulting customers, who continue to act on his instructions. Winsome argued was misperceived the repayment at this juncture, when the country is serious with its wilful defaulters, and a request with investigative agencies not to pursue their case. It added that all it did was keep "Indian banks appraised of all the developments that have taken place in Sharjah" with regard to the decrees it had obtained and its own account books.

Denying all allegations against him, Mehta told ET in a telephonic communication that these senior officials, who are now being interrogated by India's investigative agencies, were the reason behind the company's current status. Saying their actions and behaviour were misdeeds, negligence and foolhardy, he accused them of dissociating themselves form the decisions taken by them during their tenure at Winsome.

Indian lenders have reportedly been wary of Winsome's excuses for non-payment since the beginning. Suspecting a case of wilful defaulting, they had complained to central investigative agencies to help them recover the loans.

The defaulting

In an arrangement between Indian banks and a few international bullion banks, which supplied gold to Winsome, it was decided that in case Winsome defaulted in paying for the gold consignments, the Indian banks would step in as guarantor. One default could lead to recalling the entire amount, it was decided, said the ET report

Winsome defaulted on payment in March 2013, putting the onus on Indian banks to pay $2.3 million, as it continued its attempts in vain to negotiate a debt restructuring with the banks.

The former officials at Winsome argued that Mehta also refused to accept a proposal by bullion banks to offer his company more time to repay.