Bank of Baroda has proactively made a provisioning of ₹500 crore towards its exposure of about ₹1,300 crore to the cash-strapped Go First Airlines, whose voluntary insolvency plea was recently admitted by the National Company Law Tribunal.
“We are proactive in taking any provisioning which is required,” said BoB MD & CEO Sanjiv Chadha.
BOB has an exposure of about ₹1,300 crore. This does not include the exposure guaranteed by the government.
“Of this exposure (of about ₹1,300 crore), about ₹1,000 crore is collateralised by way of tangible security and by way of corporate guarantees. And we have, in this quarter, gone ahead and made a provisioning of ₹500 crore. Any potential downside has been fully taken into account and we are fully protected as far as this account is concerned,” Chadha said.
Central Bank of India too has made a 15 per cent provisioning towards its exposure to the airline.
The bank said its outstanding exposure to Go First Airlines as on March 31, 2023, is ₹1,305 crore. Further, additional amount of ₹682 crore sanctioned under emergency line of credit is guaranteed by the government .
A senior executive in BoB said that Wadia Realty’s pledged property’s current market value over ₹1,200 crore. “Our total exposure is up to ₹1,300 crore. Of this, we are covered for over 90 per cent because the land which has been pledged by the Wadias is a massive 95-acre prime land in Mumbai. So, most of our exposure is guaranteed.”
When asked if the banks have been asked by the government to bail out the airline, the person said, “No, nothing at the moment. We also need clarity on the business plan before infusing fresh funds,” the person added.
Along with this, according to court documents reviewed by businessline, Bank of Baroda also has a pledge of 30 per cent of company’s shareholding in Go Airlines.