RBI clears airline debt recast plan

The Reserve Bank of India (RBI) has given its go-ahead to State Bank of India (SBI) to restructure the ballooning debt of the airline industry, according to bankers familiar with the development.
SBI’s investment banking arm SBI Capital Markets Ltd (SBICaps) is working on the debt recast plan. SBI, India’s largest lender, is leading a 13-bank consortium to restructure the loans of the industry.
RBI has given its nod to the plan, according to a banker who has exposure to the airline industry. A senior SBI official too confirmed that his bank has received such instructions from RBI, but declined to give any further details. Both the bankers did not want to be identified.
“The issue is confidential and we are not aware of what the terms are as yet. But what we know for sure is that SBICaps has been given some instruction on what terms the restructuring should be,” said the first banker.
Another senior public sector banker, whose bank also has exposure to airlines, said SBICaps has not approached his bank with any plan to restructure the debt as yet.
Jet Airways (India) Ltd, Kingfisher Airlines Ltd and National Aviation Co. of India Ltd (Nacil)—which collectively control 65% of domestic passenger traffic—have a combined debt of $13.5 billion (`63,315 crore). State-owned Nacil runs Air India.
02/09/10 Anup Roy/Live Mint

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Categories: Indian Aviation- In General Sep 2010