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This refers to the report “Kingfisher Airlines is NPA for us, says SBI Chief” ( Business Line, January 6).
Finally, it appears that sense has dawned on State Bank of India.
After dilly-dallying during the last 12 months regarding the classification of Kingfisher Airlines' dues, the SBI decided to classify the account as NPA. Now other banks in the consortium (12 others) shouldn't have any problem in going ahead with a similar classification.
The beauty of Kingfisher Airlines' accounts with banks is that the working capital providers (read Axis Bank, IDBI Bank, and Central Bank of India) haven't classified the account as NPA.
The implication of this differential approach is that the borrower will have access to working capital limits, although his term loan accounts have become NPA with the consortium. Added to that is the stand taken by Standard Chartered Bank, reporting that it hasn't classified its term loan account as NPA. SCB can afford to take such a position, since it isn't a part of the consortium.
In all this, one only wonders how a borrower enjoys an advantageous position even while other lenders are struggling in complying with the norms for classification.
It is therefore a challenging case study to the banking regulator (read the RBI), regarding its norms for classification of NPAs.
It is also worth noting that even pending the submission of financial recovery plan to the aviation regulator, the working capital bankers are ready to continue funding Kingfisher operations.
K. V. Rao,
Bangalore
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