The big boys of banking are struggling to recover dues from grounded Kingfisher Airlines but some of the relatively smaller lenders have proven smarter and are on way to recover their loans by March 31.
Oriental Bank of Commerce, United Bank of India and Corporation Bank, all state-owned, had lent to the troubled airline for the purchase of an aircraft from Airbus. The loans were for ‘pre-delivery payment’, meaning 10-15 per cent of the price of the aircraft was given by these banks to Kingfisher, to place the order. Airlines work on a model of sale and lease-back of planes, meaning, buy a plane, sell it immediately and then take it back on lease. These banks, with combined exposure of around Rs 150 crore, almost equally shared, communicated to Airbus for recalling the loan after Kingfisher failed to service it.
Banks have to serve a 60-day notice, from the time the loan slips to the non-performing category, for recalling it. Bankers said at a recent meeting with Airbus officials, the OBC-led consortium asked the plane manufacturer to find a buyer for the aircraft ordered by Kingfisher. These banks expect to recover their dues by selling the aircraft by March 31. This particular loan to buy aircraft was not a part of the Rs 7,000 crore of loans to Kingfisher in which 17 banks are involved. Recently, State Bank of India, leader of the consortium, said they’d all decided to recall the Kingfisher loans, become a non-performing asset for the banks about a year before. The banks also said KFA’s collateral, pledge shares and promoter’s personal guarantee covers about Rs 6,500 crore of the dues.
http://www.business-standard.com/article/finance/smaller-lenders-to-recover-kingfisher-dues-by-march-31-113022100695_1.html
Oriental Bank of Commerce, United Bank of India and Corporation Bank, all state-owned, had lent to the troubled airline for the purchase of an aircraft from Airbus. The loans were for ‘pre-delivery payment’, meaning 10-15 per cent of the price of the aircraft was given by these banks to Kingfisher, to place the order. Airlines work on a model of sale and lease-back of planes, meaning, buy a plane, sell it immediately and then take it back on lease. These banks, with combined exposure of around Rs 150 crore, almost equally shared, communicated to Airbus for recalling the loan after Kingfisher failed to service it.
Banks have to serve a 60-day notice, from the time the loan slips to the non-performing category, for recalling it. Bankers said at a recent meeting with Airbus officials, the OBC-led consortium asked the plane manufacturer to find a buyer for the aircraft ordered by Kingfisher. These banks expect to recover their dues by selling the aircraft by March 31. This particular loan to buy aircraft was not a part of the Rs 7,000 crore of loans to Kingfisher in which 17 banks are involved. Recently, State Bank of India, leader of the consortium, said they’d all decided to recall the Kingfisher loans, become a non-performing asset for the banks about a year before. The banks also said KFA’s collateral, pledge shares and promoter’s personal guarantee covers about Rs 6,500 crore of the dues.
http://www.business-standard.com/article/finance/smaller-lenders-to-recover-kingfisher-dues-by-march-31-113022100695_1.html
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