AI's defaults may hit Indian banks, warns Moody's

Terming the Union Government bailout for Air India as a temporary relief, rating agency Moody’s on Monday said recurring payment defaults by the ailing carrier can adversely impact the asset quality and capital base of Indian banks. On August 4, the government had approved a $270-million (Rs 1,200 crore) capital injection for the airline. The recurring defaults imply that government support may not be timely, which is credit-negative for Indian banks, Moody’s said in a statement on Monday.

AI has arrears in interest and salary payments. It is losing around $5 million (Rs 22 crore) a day, owing to operational inefficiencies. The airlnie is not being able to meet its financial obligations without external help, the agency added.