Air India debt row: Bankers outweigh credit rating over provisioning

Mumbai: The consortium of lenders that has rejected the RBI-approved debt recast for Air India (AI) is more worried about their credit ratings and image in global markets than the nearly Rs 10,000-crore provisioning they will have to set aside under the plan, say leading bankers.
And going by this, even if the debt-laden national carrier manages to get a fresh debt recast plan done, it is unlikely to go through with the lenders, unless some basic CDR provisions are given a go by, such as scrapping the provision of tying dividend payment to profitability, whether AI makes money or not, pointed out these bankers.
The lenders are also not happy with the "special treatment" that State Bank got in the CDR proposal, prepared by its own i-bank arm SBI Caps, as despite the fact that most of them do not have as much exposure as SBI, they are forced to shell out much higher than the Government-run lender.
The lenders, barring SBI, which has given a Rs 1,100- crore cash-to-credit loan to AI, and therefore a low provisioning of only about Rs 37 crore, are also peeved at the way SBI Caps "short-changed" them in the CDR plan, as those with similar exposure will see a hole as much as Rs 500 to 700 crore in their balancesheets if it goes through, a senior public sector banker, who sought not to be named, told PTI.
15/01/12 PTI/Economic Times

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Categories: Air India Jan 2012