The Reserve Bank of India is not opposed to “professional decisions'' of banks like State Bank of India extending support to the liquidity-strapped Kingfisher Airlines, a top RBI official said here on Wednesday.
Banks are free to lend more money to the airline if they feel the loans can be recovered, said Dr K.C. Chakrabarty, Deputy Governor, RBI, on the sidelines of his interactive session with students at a city college. Responding to a question on whether the RBI is opposed to banks extending additional loans to Kingfisher Airlines, he said, “Absolutely not”.
He added that the RBI does not oppose “professional decisions of banks”.
Dr Chakrabarty pointed out that the banks were not only commercial entities, but risk-taking entities too. “If they feel that by supporting a unit, the unit can survive, they must explore that possibility,” he added. According to him, if the bank felt that by giving a little more money, it could get back the entire money, “that's what they will do”.
There have been unconfirmed reports of SBI extending an additional loan to Kingfisher Airlines, despite the account turning a non-performing asset for the bank. A bank official belonging to the lending consortium told Business Line that the airline has requested for an additional short-term funding of Rs 200 crore from the consortium, adding that the banks were yet to take a call on the proposal.
The 13-bank consortium has a total exposure of over Rs 7,000 crore to Kingfisher Airlines, of which over Rs 4,000 crore are in the form of term loans.