State-run lender United Bank of India today informed the BSE that it does not expect to recover Rs 400 crore it had lent to the grounded Kingfisher Airlines in the short-run but hoped the recovery could be possible in the long-run.
The statement came after the stock exchange sought clarification from the lender regarding yesterday's PTI report which quoted its MD & CEO P Srinivas as saying that the bank did not expect to recover Rs 400 crore loan given to the airline.
"Considering the long-drawn nature of these legal entanglements, claims raised by other statutory/regulatory authorities in view of the defaults committed by the borrower (Kingfisher Airlines) under other statutes and regulations and the amounts recovered so far, the bank feels that the possibility of any immediate major break-through in the account is difficult for the present," the bank said in a filing to the exchange.
The 17-member consortium, led by State Bank of India, could recover only a little over Rs 1,000 crore by selling pledged shares in group companies since they formally recalled the loan in February 2013.
In February this year, the banks took over the Kingfisher House after a long legal battle. The over 17,000 sq ft property near the city airport can fetch around Rs 100 crore. The only other tangible asset the lenders have as collateral is the Kingfisher Villa in Goa, which may fetch around Rs 30 crore.
The bank said however that the case has been pursued very diligently and the recovery in the long-run is possible. It also said it has fully provided for the loan as per income recognition, asset classification (IRAC) norms.
The Kolkata-based bank said it continues to fight the legal battles for recovery of dues through the 17-lender consortium to which the company owes over Rs 6,500 crore and penal interest since January 2013.
"We are individually fighting legal battles in connections with the declaration of the promoters and directors of the borrower and as the company as 'wilful defaulters' and winding-up of the corporate guarantor.
"Through these measures, we feel that recovery is possible in the long run," the bank said.
