Mallya meets RBI Deputy Governor

Anjana ChandramoulyNivedita Ganguly Updated - March 12, 2018 at 12:26 PM.

Faced with a severe financial crunch, Kingfisher Airlines' Chairman, Mr Vijay Mallya, met with Dr K.C. Chakrabarty, Deputy Governor, Reserve Bank of India, in Mumbai on Tuesday, sources told Business Line .

Bankers, belonging to the lending consortium, said that the meeting could have taken place to request the RBI for its intervention with regard to the airline's account with the banks. One of them said that the company could be “requesting the Central Bank for a special dispensation with regard to classification of the airline's account into a non-performing asset”.

The 13-bank consortium, led by State Bank of India, have an exposure of about Rs 7,000 crore to Kingfisher Airlines, of which about Rs 4,000 crore are in the form of term loans. Kingfisher Airlines' account has turned an NPA for most banks of the lending consortium.

“If the account turns NPA, then the process of corporate debt restructure (CDR) comes to a nought, and banks can start taking action on the securities offered, which could have a huge impact for the airline,” said a top official of another lending bank.

He also pointed out that since there is a broad consensus in the Union Government on allowing foreign airlines to pick up to 49 per cent equity in domestic carriers, the company could require certain clearances from the RBI. “The company could use the funds from the foreign equity participation to regularise its accounts, in which case all banks' accounts become standard.”

In such a scenario, the company could also be requesting the RBI for further restructuring, considering the current turbulence in the aviation sector. Kingfisher Airlines officials were not available for comment.

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Published on January 24, 2012 16:48