Awaiting RBI decision on airline debt recast: Bhatt

Breaking its silence over debt recast for the airline industry, State Bank of India (SBI), the country’s largest lender, today said it was awaiting a decision from the Reserve Bank of India (RBI) to restructure loans and yet treat them as standard assets.

The move will help private carriers Kingfisher Airlines and Paramount, as Jet Airways has indicated that it is not facing problems in clearing its dues. National Aviation Company, which operates Air India, was also paying its instalments on time, in spite of being debt-ridden, bankers said.

“The aviation sector is on uptick but it needs equity to survive. By restructuring some of the loans, we can reduce the stress for which regulatory clearance is required,” SBI Chairman O P Bhatt told reporters while announcing the bank’s quarterly results.

Like the real estate sector, which got a helping hand from RBI, banks want to get the regulatory go-ahead to restructure the debt, and still treat the accounts as standard assets. In normal course, during the first year of restructuring, banks need to treat the account as a sub-standard asset which requires additional provisioning.