Federal Bank attaches seaplane to recover Rs 6 cr debt

Federal Bank attaches seaplane to recover Rs 6 cr debt

Representative image.

Kerala-based Federal Bank initiated the attachment proceeding against a seaplane to recover a debt of Rs 6 crore from Seabird Seaplane, a Kochi based firm. The attachment proceedings were done on Wednesday at the Nedumbaserry airport in Kochi where the seaplane has been lying idle for last five years for want of mandatory approvals from central and state governments.

It is said to be for the first time in Indian banking history that a seaplane is being attached.

The Kerala government had initiated seaplane services in 2013. The Central government also announced that seaplanes need to be promoted for improving regional connectivity. But owing to protest by a section of fishermen alleging that the operation of seaplanes would affect marine resources, the Kerala government backtracked from the project, even as it had spent over Rs 15 crore for setting up infrastructure.

The Seabird Seaplane firm took a loan of Rs 4.15 crore from Federal Bank in 2014 for purchasing US made Kodak 100 Aircraft, worth around Rs 14 crore. But the loan became a non-performing assest (NPA) in 2016 owing to the default. Since SARFAESI Act does not have a provision to attach aircraft, the bank initiated the provisions of Insolvency and Bankruptcy Code (IBC) through National Company Law Tribunal.

Federal Bank vice-president Mohamed Sageer told DH that an auction of the aircraft would be initiated through NCLT and if there were no prospective buyers, the US-based manufacturers of the seaplane would be contacted to explore buy back option. The attachment proceedings of the seaplane was initiated by a team led by Federal Bank senior vice president K A Babu.