The Kumbakonam-based City Union Bank (CUB) has lent money to SpiceJet but its Managing Director & CEO, N Kamakodi, isn’t worried about the bank’s exposure to the airline. “We do not want to underestimate the (Sun) group’s potential,” he said in a brief interview to Business Line.
CUB has some exposure to SpiceJet; as the airline is said to be in deep trouble, what would its impact be on your asset quality?
We are absolutely comfortable with our exposure to SpiceJet. We are monitoring the situation and are in touch with them. Besides, our exposure to any company is backed by some immovable collateral with a good margin, and that is the case with SpiceJet too.
We know the promoters for a very long time, and we have been their bankers. We understand that there are some issues with the airline, but the group has the wherewithal to iron out those issues.
The government seems to have requested banks to lend to SpiceJet…..
No, we haven’t heard from the Government yet.
In case the company approaches you, would you be open to lending more?
First of all, the group’s exposure to any bank is very minimal compared to the size of its business. Secondly, your question is very hypothetical. So far, they have not approached us for any additional funds. We heard they are trying to bring in some investors, for its working capital requirements. If they approach us, we will consider the request as per our norms and other regulatory frameworks. But, as I told you earlier, we do not want to underestimate the group’s potential.