Low-cost carrier SpiceJet has offered to settle the outstanding ₹97 crore dues to the City Union Bank Ltd. (CUB) in a phased manner before June 2023, the lender’s MD said on Saturday.
“The management of SpiceJet has come forward to settle their dues in a phased manner,” CUB’s MD & CEO N. Kamakodi told analysts on a call. “They have been servicing their interest dues regularly and interest are being paid up to July,” he said.
Explaining that the carrier had requested the bank to renew the existing facility and terms and conditions, he said the renewal plan was mutually agreed upon.
As per the agreed terms and conditions, SpiceJet had immediately paid ₹3 crore dues in July and agreed to pay an additional ₹12 crore before the end of August.
While agreeing to settle the balance of ₹97 crore before June, SpiceJet had, as collateral, pledged two crore shares owned by the promoter. The market value of the stake is over ₹90 crore.
The account had now moved out of the special mention account status. Till Q3 of FY22, CUB had made a provision of ₹85 crore and a further contingency provision of ₹12 crore in Q1 of FY23. So, the bank had made a contingency provision for the entire sum, he said.
The lender also said it was looking to push the growth pedal to achieve credit growth of 15-18%, against 12-15% announced earlier, as it was expected to do well on all factors such as credit growth, non-performing assets and asset quality.
“As of now, it looks as if we could press the growth pedal towards the third and fourth quarter,” he added.
In the coming days, CUB expects the slippages to come down and recovery to improve from FY22, resulting in substantial reduction in gross and net NPAs for FY23.
Mr. Kamakodi said it had been planned to open 50-75 branches across different States during the third and fourth quarters at an investment of ₹25 lakh per branch. The bank’s branches in Tamil Nadu would achieve break even in 18 months, and in other States in about 30-36 months, he added.