Public lender Bank of Baroda MD & CEO Sanjiv Chadha on Tuesday said that the bank has made a prudential provision of Rs 500 crore for its exposure in the crisis-hit airline Go First. According to a report in The Economic Times, Chadha in an interactive session confirmed the development.
Chadha added that the bank, which has around Rs 1,300 crore exposure in the cash-strapped carrier, identifies issues in advance and makes provisions if required.
On May 2, Wadia group-owned Go First said it has been “forced” to apply to the National Company Law Tribunal Delhi (NCLT) for resolution and protection under Section 10 of IBC due to the ever-increasing failure of Pratt and Whitney engines that power its fleet.
Besides, the carrier said it will temporarily suspend flight operations on May 3 and 4 due to a "severe fund crunch".
In its bankruptcy filing to NCLT, Go First said it owes Rs 6,521 crore ($797.38 million) in total to Bank of Baroda, IDBI Bank and Deutsche Bank, which are its financial creditors.
The airline has further said it has a total liability of about Rs 11,463 crore to banks, other creditors, vendors, and others.
On the sidelines of the Q4 results, Chadha said that of the total exposure, about Rs 1,000 crore is collateralised by tangible securities and by way of corporate guarantees. In Q4, the bank has gone ahead to make provision of Rs 500 crore for this account.
This means any potential downside has been fully taken into account and the bank is completely protected as far as this account is concerned, Chadha on Tuesday.
The low-cost carrier was granted bankruptcy protection by NCLT last week, which also halted the repossession of aircraft by lessors.
In a regulatory filing to the bourses, private lender Axis Bank clarified that it has no funded or non-funded exposure to the financially-troubled Go Airlines.
17/05/2023 Business Today
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