Bankers concerned over Kingfisher losing licence

Kingfisher lenders, including SBI, today expressed concerns over the airline losing its licence to fly, but said recovery of loans through sale of its assets is the last option.

"... we are concerned as we have no control on these developments. We were prepared for all these. The last thing we bankers want is a complete shut-down of the airline, as we want the airline to resume operations and repay our money," S Vishwanathan, the Managing Director (Mid-Corporates) of SBI, the lead lender to Kingfisher, told PTI.

SBI has over Rs 1,500 crore of exposure to the grounded airline. The 17-bank consortium has total exposure of over Rs 7,000 crore to the airline. Shyam Srinivasan, Managing Director and Chief Executive of Federal Bank, which has an exposure of Rs 80 crore (en-cashed bank guarantee) his bank had fully provided for this NPA in the March quarter itself.

Aviation regulator DGCA today suspended the flying licence of Kingfisher Airlines following the airline's failure to come up with a viable plan of financial and operational revival.

An official of another public sector bank, which has an exposure of close to Rs 500 crore to the airline, said, "Recovery is the last option we are looking at, as at best we will be able to recover just about 15 per cent of the total amounts from the pledged assets."

The official was answering a query whether banks will look at recovery measures. Vishwanathan further said, "There are three options for the airline and the banks. First, the airline restarts working and then starts repaying us; second, a new investor comes and we finance him or he repays our debt and runs it on his own; and finally the airline is completely shut down, in which case we will have to look at recovery measures."

Another city-based bank official who did not want to be named said, "We are persuading the airline to bring some fresh equity and resume operations. Towards this we can even look at recasting his existing exposure as a fresh lifeline."

When asked could the banks recover their dues from taking over and monetising the assets of other group companies, he said, "It depends on the relationship of the airline with other group companies. But that is a legal step. Recovery is the last resort we want to begin now," he said.

The banks had already restructured Kingfisher loans worth Rs 6,500 crore.
The carrier has been saddled with a loss of Rs 8,000 crore and a debt burden of another over Rs 7,500 crore, a large part of which it has not serviced since January this year.