In what could be the end of the road for the beleaguered Kingfisher Airlines, a consortium of 17 banks is considering recalling loans aggregating Rs 7,000 crore to the private carrier.
Bankers described the consortium’s decision as unanimous. Loan recall normally triggers initiation of recovery proceedings.
Despite several rounds of meetings over the last year or so, the management of the country’s once second-biggest airline did not come up with any concrete plan of action for pumping in funds to get the grounded airline up and flying, said the bankers.
According to Shyamal Acharya, Deputy Managing Director, State Bank of India, the bankers’ consortium has run out of patience.
“We (the full consortium of banks) first met in December. After that, there were two small group meetings. The consortium has given the airline almost two months time but they have not been able to come up with any concrete development on any front.
“The consortium felt that it will be difficult to give the airline any more time, so it is a case for terminating the relationship,” said Acharya. As giving a loan is a decision of the bank’s board, recalling the loan is also its decision. So, each bank will brief its board about the position and a final decision will be taken by the consortium in the next 7 to 10 days.
On the basis of today’s decision, Acharya said, if the bankers decide to recall the loans, legal action will follow.
Kingfisher brand value
Recovery proceedings against the airline could be initiated under the Securitisation & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Debt Recovery Tribunal.
“When advances are called off, banks will try to realise whatever securities are available with them… If you take the personal guarantees, if you take the brand value of Kingfisher and everything, then, it is more than the value of what is total outstanding,” said Acharya.
Asked if banks will suffer any losses, he observed that in any recovery process, there is definitely a ‘hair-cut’ but it is difficult to say how much.
http://www.thehindubusinessline.com/companies/banks-may-recall-loans-of-rs-7000-cr-to-kingfisher/article4408174.ece?homepage=true
Bankers described the consortium’s decision as unanimous. Loan recall normally triggers initiation of recovery proceedings.
Despite several rounds of meetings over the last year or so, the management of the country’s once second-biggest airline did not come up with any concrete plan of action for pumping in funds to get the grounded airline up and flying, said the bankers.
According to Shyamal Acharya, Deputy Managing Director, State Bank of India, the bankers’ consortium has run out of patience.
“We (the full consortium of banks) first met in December. After that, there were two small group meetings. The consortium has given the airline almost two months time but they have not been able to come up with any concrete development on any front.
“The consortium felt that it will be difficult to give the airline any more time, so it is a case for terminating the relationship,” said Acharya. As giving a loan is a decision of the bank’s board, recalling the loan is also its decision. So, each bank will brief its board about the position and a final decision will be taken by the consortium in the next 7 to 10 days.
On the basis of today’s decision, Acharya said, if the bankers decide to recall the loans, legal action will follow.
Kingfisher brand value
Recovery proceedings against the airline could be initiated under the Securitisation & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Debt Recovery Tribunal.
“When advances are called off, banks will try to realise whatever securities are available with them… If you take the personal guarantees, if you take the brand value of Kingfisher and everything, then, it is more than the value of what is total outstanding,” said Acharya.
Asked if banks will suffer any losses, he observed that in any recovery process, there is definitely a ‘hair-cut’ but it is difficult to say how much.
http://www.thehindubusinessline.com/companies/banks-may-recall-loans-of-rs-7000-cr-to-kingfisher/article4408174.ece?homepage=true
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