BoI to recast Rs 725-cr airlines bad debts soon

Vijay Mallya-owned Kingfisher Airlines accounts for around Rs 500 crore of the Rs 725-crore of stressed airline loans that Bank of India (BoI) has on its books, which will be recast before the end of December, a senior bank official said here today.

"We will soon sit down with the managements of the Kingfisher and Paramount Airways to restructure their bad debts with us. We have around Rs 4,000 crore exposure, which is 3.4 per cent of our overall advances, to the airlines and out of which Rs 725 crore have become non-performing assets," a senior BoI official who wished not to be identified told PTI on the sidelines announcing its Q2 results meet here today.

The city-based leading state-run lender reported a whopping 91 per cent jump to Rs 617 crore in its net profit for the quarter ended September primarily driven by higher interest income and lower cost of funds besides lower provisioning (sequential) during the quarter.

The official further informed that out of this Rs 725 crore NPAs, Kingfisher owns Rs 500 crore which have become bad loans and the rest Rs 225 crore are with Paramount. Kingfisher has Rs 6,000 crore debt with lenders.

Kingfisher Chairman Mallya had told the company's AGM early this month that the airline was expected to finalise the restructuring of its Rs 6,000-crore debt in a month. The development comes ahead of the carrier's plans to raise $250 million through a global depository receipts issue.