Letter to BS: The role of banks in Jet saga is a matter of concern

This refers to the editorial “Lessons from Jet”. The role of the banks in this sad saga is a matter of concern. First, the banks completely ignored the danger signals which were emanating over the past few months. Were there issues such as diversion of bank funds? Was income accruing to Jet Airways being booked in private, closely held firms of the promoters? Second, in the latter half of last year why didn’t banks force the politically influential and well networked promoters to bring in new investors in Jet Airways? Thirdly, all these months, why was the chairman of the State Bank of India (SBI) assuring the public that fresh funds will be infused knowing fully well that bank funds could not be invested until serious investors were willing to buy stakes in the beleaguered airline, especially with promoters not willing to give up control? Such assurances gave false hope to the employees, suppliers, vendors of Jet Airways and not to mention members of the public who continued to book tickets on the airline whose steadily deteriorating financial situation would eventually ensure there would be no planes to fly and no money to buy fuel. Did the bankers give these assurances to give the false impression that this airline will be revived when the clear objective was to ensure that the inevitable does not happen before the elections? Well it did happen and there is no real investor willing to put in money. So now the banks are saddled with 50 per cent of the equity of a dead airline and huge amount of unpaid loans. No lessons were learnt from what happened to Kingfisher.

It is imperative to look into the real reasons for the fall of this airline — the role of promoters and banks, the diversion of bank funds and accounting irregularities.


  Arun Pasricha,  New Delhi

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