State Bank of India (SBI) on Friday ruled out any further lending to Kingfisher Airlines. “The company does not have any asset to hypothecate and there is no room for fresh debt,” said SBI Chairman Pratip Chaudhuri, adding banks had given time to the airline’s chief, Vijay Mallya, to get an investor.
“If we pull the plug now, that would be irretrievable. If we are patient with him, there are chances he may revive (the company),” Chaudhuri said, adding, “If we pull the plug now, all possible investors would walk away. Having waited so long, we might as well wait a little longer.”
In a meeting in September, the airline had sought immediate funding from lenders, but the request was turned down. Last week, too, officials from the airline met lenders, but no resolution emerged. The airline’s woes have intensified, with its employees going on a strike, protesting against the non-payment of salaries for the past seven months.
“In the lenders’ meet, it was decided 80 per cent of the money being unfrozen by tax authorities would be made available to the company, specifically towards the payments of salaries,” Chaudhuri said, adding the decision had been taken on humanitarian grounds. However, this was subject to the condition that the entire sum released be used to pay salaries, he said.
Kingfisher Airlines has debt of about Rs 7,000 crore. Loans to the airline are classified as non-performing assets on the books of most banks, including, SBI, Bank of India, Bank of Baroda and Punjab National Bank. In November 2010, the airline’s loans were restructured.
However, Kingfisher began to default on payments and loans to it turned non-performing assets for most lenders in the third and fourth quarters of 2011-12.