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		The civil aviation ministry&rsquo;s request to offer up to Rs 600 crore of working-capital loans to troubled SpiceJet has left lenders in a quandary. While not many banks are willing to increase their exposure in the airline company, they fear the government might push them to extend fresh loans.</div>
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		&ldquo;Our exposure in SpiceJet is very small and is backed with collateral. Theoretically, we are not going to lose our money. But even if we lose what we have lent, we are not going to try to salvage it by providing additional loans. It does not make sense for us,&rdquo; a senior banker with a private bank who did not wish to be named told Business Standard.</div>
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		On Tuesday, the government announced a series of measures to bail out cash-strapped SpiceJet, which is in danger of having to suspend its operations. Apart from fresh working-capital loans from banks, the civil aviation ministry requested public-sector oil companies to give the airline credit for up to 15 days. The Directorate General of Civil Aviation (DGCA) has been asked to open bookings of SpiceJet till March 31, 2015, while airport operators have been asked to provide 15 days to the airline to make payments.</div>
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		The ministry proposed the fresh working-capital loans be backed by a personal guarantee of the SpiceJet chairman. These loans would be repaid immediately after securing long-term investment for the airline company, typically within eight weeks. SpiceJet might also be allowed to raise money through external commercial borrowings (ECBs).</div>
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		But bankers appear undecided. &ldquo;We are yet to receive any communication from the government. We will evaluate the proposal once we hear from them,&rdquo; said N Kamakodi, managing director &amp; chief executive of City Union Bank. The bank has an exposure of Rs 100 crore, net of financial collateral, in SpiceJet.</div>
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		Kamakodi said the bank also needed to review its group exposure limit before deciding on offering fresh loans to SpiceJet. &ldquo;We have also offered loans to the Sun group (promoters of SpiceJet). So, we need to consider if providing more loans to SpiceJet will breach our group exposure limit,&rdquo; he said.</div>
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		Bankers said government-owned banks would probably have no option but to provide fresh finances. &ldquo;If banks have to offer fresh loans, we will require some comfort in the form of corporate guarantees and additional collateral. Promoters will also need to bring in significant equity. The worst for the airline industry is probably over, with oil prices falling and air travel picking up. So, it makes sense to support and help SpiceJet revive its operations,&rdquo; said a banker familiar with the developments.<br />
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The civil aviation ministry's request to offer up to Rs 600 crore of working capital loans to troubled SpiceJet has left lenders in a quandary

Govt's request for fresh loans to SpiceJet leaves banks in a quandary

Cash-strapped carrier promoted by media baron Kalanithi Maran was forced to cancel flights today morning

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