Commercial banks which have lent over Rs.7,000 crore to Kingfisher Airlines are closely monitoring the situation and are tightening the noose around its promoter to protect their interest.
They may take drastic steps, including auctioning the mortgaged assets or selling pledged shares in case the airline fails to come up with a revival plan in the next three weeks.
State Bank of India (SBI), the lead banker of the 17 member lenders’ consortium, with exposures of over Rs.1,400 crore to Kingfisher, said it was concerned about the current situation and was waiting to hear from the management.
“We are talking to them daily. It (the lock out) is a matter of concern but what we can do? Our efforts are on to recover the maximum by all possible means,” said S. Visvanathan, Managing Director, SBI. “The banks are looking at all aspects to ensure that money given to them (Kingfisher) will be recovered,” Mr. Visvanathan added. By the end of this month, Kingfisher should come up with a revival plan which the banks will closely examine. SBI Caps has been entrusted with this task but banks have made it clear that there will be no morerestructuring this time. The airline has told banks that the loans could be repaid by flying all the aircraft to generate money and by roping in a foreign partner. “Let us not second guess. They will come out with something. Our effort is to ensure that our interest is protected at all costs,” the SBI MD said.
The banks also confirmed that Rs.60 crore had been released to Kingfisher from an escrow account that was de-frozen by the tax authorities. However, the airline has not paid salary to employees so far. “We are still waiting to hear from the management. We don’t know what is Mr. Vijay Mallya upto? He is not saying any thing,” said a striking employee.
Meanwhile, the lock out is expected to be extended till October 20. The deadline of the DGCA show cause notice ends on October 19.