Banks told to come clean on lending to airlines

New Delhi: The finance ministry has directed public sector banks to disclose their exposure in airline companies after it was alleged that IDBI bank overlooked prudential lending norms while sanctioning Rs 900 crore to Kingfisher group.
The government has asked all state-owned banks to submit the details including terms of lending within a week, a finance ministry official said.
“We’ve asked for total loans sanctioned, outstanding amount and company-wise details. We want to know what is the exposure of state-owned banks to the aviation sector,” the official said.
The ministry wants to assess if there have been any irregularities while sanctioning loans to airline firms, a bank official said.
The bank had already recalled a Rs 750-crore loan advanced to Kingfisher Airlines after the company failed to stick to its repayment schedule.
The finance ministry is concerned that financial health of the aviation companies may translate into delayed repayments and hence large number of bad assets or non-performing assets (NPAs).
“The civil aviation ministry has also been complaining about lack of funds that these companies face. It has also raised the demand of restructuring the loan of Air India and pare the interest rates. This exercise will do a reality check ,” the finance ministry official said.
14/06/10 Dheeraj Tiwari/Economic Times

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Categories: Indian Aviation- In General Jun 2010