A full recovery of $1.4-billion in loans owed by Vijay-Mallya led Kingfisher Airlines was unlikely in the short term and banks have told the airline to infuse equity, State Bank of India (SBI) chairman Pratip Chaudhuri said on Tuesday.
Kingfisher Airlines last week won more time from lenders to develop a turnaround plan. It has never made a profit in the struggling Indian airline industry and has grounded most of its fleet.
"It is looking difficult unless they get fresh equity," said Chaudhuri. "We have told Mallya either he has to get equity or pump in money from his liquor business."
SBI heads the lenders’ consortium. Most banks have declared its loans to be in default during the December quarter.
Recently ICICI Bank unloaded its Kingfisher debt to a fund managed by SREI Infrastructure Finance .
Last week, lenders were reported to be considering ways to recover their money including invoking securities and guarantees against their loans.