Kingfisher Airlines' debt levels are at a peak, and there is no room for further debt, the State Bank of India Chairman, Mr Pratip Chaudhuri, said here on Monday.
“Kingfisher, as a company, needs to get in more equity, and the sooner they get it (it's better). I would say they should get it as of yesterday,” he said, while talking to reporters on the sidelines of the bank's CSR programme.
According to him, the loans to the company are not “so much fund-based”. The loans have been given as guarantees to oil companies so that they can keep supplying fuel to Kingfisher, he pointed out.
“If we discontinue the guarantees, the whole fuel supply chain will stop. If we precipitate action, it would endanger jobs, endanger connectivity in the country. We are working with the company,” said Mr Chaudhuri.
The company should bring in capital, whether from domestic investors, foreign investors or foreign airlines, “we are neutral on the source of the equity”, he added. However, the company in its response has told banks that it would be easier for them if the FDI rules were changed.
“We have no comments on that, and it is for the Government to decide on that,” he said.
Mr Chaudhuri added that the whole aviation sector was under stress and only those airlines with “good amount of equity can hope to navigate through this”.
The banks are working “very patiently with the companies, persuading them to increase the time of repayment of their loans. The companies also have to show some resolve,” he said.
In the case of Air India, Mr Chaudhuri said that the Government has shown a lot of resolve, and has pumped in equity.
“They have protected the banks against any large-scale write-off. In case of Air India, the owners or shareholders are showing a lot of proactive action,” he added.