Power and airlines to remain bugbear for banks

Mumbai: Though various policy decisions have been taken by the government to provide relief to ailing state-owned power distribution companies and airlines, the Reserve Bank of India (RBI) is not enthused. It remains sceptical about these, saying exposure to these sectors could take a toll on banks.
RBI, in the Financial Stability Report released on Thursday, stated the power and aviation sectors were likely to continue facing funding constraints. These could also be affected by policy uncertainties, which could pose challenges to the asset quality of credit to these sectors.
The government plans to restructure the large number of loans given to power distribution companies. Also, it is yet to come up with a financial package for Air India. The Centre for Asia-Pacific Aviation has pegged the combined losses of Indian air carriers in 2012-13 at Rs 7,150 crore.
“Their viability and ability to pay on time would remain a concern for us,” said the chairman and managing director of a public sector bank.
29/06/12 Business Standard

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Categories: Indian Aviation- In General Jun 2012