 "Central Bank of India")
Central Bank of India has said that it does not expect to suffer a hair cut or loss for its Rs 1,400 crore exposure to Go First, the no-frills airline under insolvency proceedings.
The public sector lender maintains close to 60 per cent provision against loans to the Wadia group airline, which it is optimistic about in light of revival plans.
Go First stopped commercial operations on May 3, 2023. Later in the same month, the National Company Law Tribunal (NCLT) admitted its plea for voluntary insolvency and initiated a corporate insolvency resolution process (CIRP).
Central Bank of India, Bank of Baroda, IDBI and Deutsche bank have lent money to the grounded airline, too.
Central Bank executives, in an analyst call after the company announced Q1 FY24 results on Monday, said the exposure to Go Air is almost Rs 1,930 crore. Out of this amount, almost Rs 620 crore is guaranteed by the government under the Guaranteed Emergency Credit Line (GECL).
The actual exposure comes to around Rs 1,400 crore against which Central Bank is holding a provision of Rs 800 crore. The bank is sufficiently secured with collateral cover and it does not see any haircut or loss even in extreme situations, they said.
More From This Section
Go Air has been admitted under section 10 of the Insolvency and Bankruptcy Code (IBC). The purpose is to preserve value and take up operations later and not for any insolvency or bankruptcy purposes. The necessary inspection is happening from the Directorate General of Civil Aviation (DGCA). "There is also some positive movement in the arbitration at Singapore. In all possibility, we are optimistic as far as the company activities are concerned,” said Central Bank executives.
The Singapore International Arbitration Centre (SIAC) has directed aircraft engine maker Pratt & Whitney (P&W) to release and dispatch five engines every month to the carrier starting August 1 until December 31.
