The consortium of 13 banks that have lent to Kingfisher Airlines (KFA) will keep a stern eye on how it is spending funds, amid strong indications that they are not averse to providing fresh loans, including short-term working capital, if the cash-strapped carrier’s promoters and management agreed to a set of conditions.
Kingfisher would have to regularly send a detailed report on its spending, cash inflow and other financial aspects to the banks.
“The details of the agreement of the new credit package would soon be worked out,” the chairman of a public sector bank said.
The consortium has a total exposure of over Rs 7,000 crore to the bleeding airline, promoted by liquor baron Vijay Mallya, and hold 23.37% stakes in KFA. The banks would have the right to raise questions in case they feel the money is not being “directed properly.”
“We would be willing to provide fresh credit to Kingfisher but naturally the agreement would come with stringent riders,” a top bank executive said.
The income tax department is also likely to defreeze the bank accounts of Kingfisher once the bank guarantees come in. “These bank guarantees are expected to come in the next few days and after that the department will withdraw tax the notices,” a senior finance ministry official said.
The income tax authorities froze the company's bank accounts as it failed to pay its dues, especially running costs.