Before bad money becomes worse, banks are set to pump in some more good money into Kingfisher Airlines, in an attempt to breathe some life into the ailing carrier.
After the State Bank of India (SBI) decided to extend further credit on Tuesday, all the other 12 banks that form part
of the creditors’ consortium have indicated that they are not averse to providing additional line of credit to the Vijay Mallya-promoted company.
They plan to provide additional working capital loans so that the existing Rs. 7,000 crore loan does not turn into non-performing assets.
SBI has already decided to provide fresh loan of Rs. 1,650 crore to the ailing airline.
“There is no major cause for concern and we are willing to provide further capital to the company,” the chairman of a public sector bank that has a sizeable exposure to the airline, told HT. “We are confident that with the change in policy framework on foreign direct investment in the aviation sector, things will improve drastically.”
However, the banks could have strict conditions for the private carrier and keep a close eye on its cash flows.
SBI has an exposure of Rs. 1,410 crore to the beleaguered airline. IDBI Bank, Punjab National Bank and Bank of India have exposures to the tune of Rs. 719 crore, Rs. 702 crore and Rs. 552 crore respectively. Private sector lender ICICI Bank also an exposure of Rs. 430 crore.
The consortium of banks holds 23.37% in the airline.