Banks finally decide to start recovery of Kingfisher loans

Kingfisher lenders today finally decided to start the recovery process for Rs 7,500-crore loans given to the grounded airline, a top official of State Bank of India said today. "We have decided to recall (initiating the recovery process) the loans given to Kingfisher Airlines. However, each bank board will decide the future course of action," SBI Deputy Managing Director (Mid-Corporates) Shymal Acharya told reporters here after a two-hour meeting of bankers with company representatives. The meeting was attended by five bankers, led by SBI, and the airline's management, including CEO Sanjay Agarwal and UB Group President and CFO Ravi Nedungadi. The decision comes even as Kingfisher Chairman Vijay Mallya has promised to airline employees about clearing their salaries for 11 months and has assured of restarting operations with the forthcoming summer schedule. "No progress has been made so far by the airline management to restart operations, and the bankers feel that enough time has been given to the company," Acharya said. He admitted that banks will have to "take a hair cut", meaning the difference between the market value of the collateral and value assessed by the lender. He, however, did not specify to what extent. The exposure of banks to the troubled carrier runs into Rs 6,360 crore. Unpaid interest and compounded interest take it to over Rs 7,500 crore. SBI, the leader of the consortium of lenders, has the maximum exposure with Rs 1,600 crore, followed by Punjab National Bank with Rs 800 crore, IDBI Bank Rs 800 crore, Bank of India Rs 650 crore and Bank of Baroda Rs 550 crore. Kingfisher has been grounded since October 1 last after a labour unrest due to non-payment of salaries which have not been paid since last May. (MORE)