ICICI Bank seeks more security on loans to Kingfisher

ICICI Bank, India’s largest private sector bank, asked ailing Kingfisher Airlines for more security on its Rs 600-crore loan, after the airline’s stock hit an all-time low on Monday.

“The bank as a matter of routine requested security be topped up or that the loan amount be adjusted suitably,’’ said an airline spokesperson, denying reports of recall of the entire loan or notice for the sale of securities. As of February 18, ICICI owned 4.56 per cent in Kingfisher, according to data on the Bombay Stock Exchange (BSE).

ICICI Bank declined to comment. It acquired the stake when the airline converted a part of its loan to equities and issued those to lenders as part of a debt recast package.

A senior public sector bank official said ICICI Bank, part of a consortium of lenders, had decided to keep its securities separate at the time of restructuring in 2010. Now, since the value of the collateral had declined, the bank wanted the UB group entity to top up, he said.

State-run lenders to Kingfisher are also facing deficit in value of securities. But they are yet to take a call on asking the airline to bridge the gap. He said doing so might make matters worse and reduce any chance of recovery.

Shares in Kingfisher fell to a record low of Rs 16.50 in intra-day trade on the BSE, but finally ended the day 6.7 per cent lower at Rs 16.75. The airline’s shares have lost over 60 per cent of their value in the past one year, and on Monday saw another crash, as the market went abuzz with speculation that the directorate general of civil aviation (DGCA) would give its report on the airline to the civil aviation ministry. DGCA had sent a show-cause notice to the airline in February-end, asking it to explain why its operations should not be suspended.