MUMBAI (TIP): Embattled liquor baron Vijay Mallya’s proposed ‘sweetener’ deal of Rs 4,000 crore has not gone down well with bankers.

Mallya offered on Wednesday to repay more than half of the Rs 7,000 crore his now-defunct Kingfisher Airlines (KFA) owes creditors. Mallya’s lawyers told the Supreme Court he is ready to pay by September Rs 4,000 crore of the Rs 6,903 crore taken as loans by KFA. However, together with interest and other dues, the loan amount comes to around Rs 9,000 crore.

The court has asked banks to respond within a week to Mallya’s proposal.

“He (Mallya) has just said it but there is no concrete plan on how will we see the actual money,” said a public sector bank official.

“To consider the settlement offer, there are certain guidelines on one-time settlement that have been laid out and we need to follow the due procedure,” a senior SBI executive said. “There are rules that we have to follow with regard to the principal loan amount, interest, value of the property, value of the assets, securities, discounted value of cash flows, etc…which is a complex calculation that needs to be done. Only then we can come to a conclusion.”

“It has just been proposed yet…Let us see what the offering has to say. We are dealing with public money so we cannot just settle or take a haircut.It’s too primitive to say anything currently, ” another senior public sector bank executive said.

A former SBI official who was involved in dealing with the KFA loan account said Mallya’s offer “will not be acceptable because banks will have to write-off about Rs 3,000 crore plus some interest.”

“Out of the Rs 4,000 crore that he is offering, about half of it is already with the courts. About Rs 600 crore in the form of properties is lying with the courts and another Rs 1,300-1,400 crore worth of shares are attached, which is very liquid. I doubt banks will accept it,” he added.

Lenders can also attach Mallya’s personal assets since he has given a personal guarantee on the loans. However, since a large number of assets are abroad, it would be difficult to attach them, bankers said.

“Going by the reports, if you take Rs 7,000 crore as loan dues and what has been recovered, it needs to be seen how much the banks are willing to write-off,” said an executive of a company, which specialises in restructuring and turnaround of stressed firms.

Mallya’s luxury Airbus A319 being auctioned to recover dues

The service tax department is set to auction defunct Kingfisher Airlines chairman Vijay Mallya’s luxury Airbus A319 to recover part of dues of over Rs 800 crore. The department hopes to raise Rs 150 crore from the auction. Over a dozen monogrammed towels and napkins bearing the initials of Vijay Mallya, a copy of Ambani & Sons by Hamish McDonald and DVDs of over 100 films curated by Mallya himself will be sold along with the aircraft on May 12.

The service tax department, which seized the Airbus A319 in December 2013, has appointed Air India as technical consultant for sale of the aircraft. Air India has also been entrusted the task of cleaning the aircraft before potential buyers begin physical inspection.