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SBI classifies Kingfisher Airlines account as NPA

Last updated on: January 6, 2012 15:23 IST

SBI classifies Kingfisher Airlines account as NPA

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BS Reporters in Mumbai, New Delhi

The Kingfisher Airlines account became a non-performing asset for State Bank of India (SBI) on Thursday while the aviation regulator gave the airline three days to come back with a detailed plan on financial recovery and safety.

SBI Chairman Pratip Chaudhuri told reporters in New Delhi on Thursday the Kingfisher Airlines (KFA) account had turned into a non-performing asset (NPA). "The account became an NPA on December 31, 2011. They are in default," Chaudhuri said.

As a result, the airline has been given 90 days to regularise the account. The country's largest bank has an exposure of Rs 1,500 crore (Rs 15 billion) to the airline.

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The total outstanding debt of the airline is Rs 6,149 crore (Rs 61.49 billion). A senior official of Bank of India, which has an outstanding debt of over Rs 500 crore, said it would be treated as an NPA.

A Bank of Baroda official also confirmed the airline was yet to service due instalments and they were considering treating it as a bad loan. PNB Chairman & Managing Director K R Kamath said if the airline failed to repay by January 31, 2011, the account would be classified as an NPA.

In response to an SMS query, the airline spokesperson wrote, "All KFA accounts with banks will be maintained as standard." He did not elaborate.

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While SBI's exposure is the highest, the others include IDBI Bank (Rs 727.63 crore), Punjab National Bank (Rs 710.33 crore), Bank of India (Rs 575.27 crore) and Bank of Baroda (Rs 537.51 crore).

However, KFA has been paying its due to banks that have provided it with working capital. Banks like Axis Bank, IDBI Bank and Central Bank, which provided working capital to the airline, said their loans were being serviced.

According to a senior executive of Standard Chartered Bank, who requested anonymity because of the sensitivity of the issue, the foreign lender has not classified its loans to KFA as NPA as the instalment is not overdue for more than 90 days.

The bank had offered loans to Kingfisher Airlines to finance aircraft acquisitions. It does not have any working capital exposure to the airline.




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