Banks have started classifying loans extended to Kingfisher Airlines as non-performing assets (NPAs),making fresh exposure to the troubled airline difficult. As many as eight banks have already declared their loans to KFA as NPAs as on December 2011. If the situation doesnt improve,the remaining ten banks are likely to classify them as NPAs in the coming weeks,bankers said.
Reiterating its stand on KFA,a senior official of a nationalised bank said,We have to be satisfied about the viability of the company. There is no point restructuring if the companys operations are going to be unviable. We had asked them to come up with some fresh funds if the banks were to consider their request for restructuring or bailout. We want to see more funds coming from the company itself. This has not happened.
As some of the banks had already declared their KFA exposure NPAs,banks will have to take the consortium route to bail out the firm. Some banks have already made provisioning for loans defaulted by KFA. How can we extend more loans? Its networth has been eroded. In the Air India case,the approval for restructuring by the banks came after a Group of Ministers okayed sovereign guarantees for Rs 7,400 crore non-convertible debentures, said a source.
SBI with an exposure of Rs 1,400 crore is the largest lender to KFA.
Bank of India and IDBI Bank are the other big lenders. Experts said KFAs non-performing loans were last year rechristened and repackaged into subordinated debt,but it defaulted on its obligations.
* PNB has to make a provision of R 435 crore as Kingfisher loans turned bad
* UCO Bank has declared Kingfisher account as NPA