New Delhi: The finance ministry has turned down Air India’s request seeking letter of comfort (LoC) for increasing the buyers’ credit limit to $288 million from Standard Chartered Bank. This is a major setback for the cash-strapped airline which is finding it difficult to pay its vendors for spare parts and maintenance.
Buyers’ credit is a financial arrangement wherein a bank or a financial institution extends a loan directly to a foreign buyer for the purchase of goods and services from the exporting country.
“The finance ministry has communicated to aviation ministry that it will wait for the report of committee of officers on Air India’s turnaround and the financial restructuring plans before considering its demand for the LoC,” government sources told FE. A group of ministers (GoM) headed by finance minister Pranab Mukherjee is currently monitoring the public sector Air India’s performance periodically.
10/10/11 Nirbhay Kumar/Financial Express
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