The 17-bank consortium that funded Kingfisher Airlines will meet on Saturday to decide its future course of action against the beleaguered private carrier.
The meeting has been convened at Mumbai by State Bank of India, which heads the consortium, sources in the banking industry said.
There is still no clarity as to whether Kingfisher Airlines’ promoter will come up with a credible proposition for equity infusion at the upcoming meeting on Saturday.
If nothing concrete comes through on Saturday, then bankers would have to think of initiating recovery proceedings, said a banker who did not wish to be identified.
So far, the public sector lenders have not initiated any action to recover their dues. For most banks in the consortium, Kingfisher Airlines is a non performing account.
An earlier attempt to restructure Kingfisher Airlines through corporate debt restructuring (CDR) mechanism had failed.
The attempt failed as the promoter could not bring in the desired equity funds for the package to sail through.
Banks will now be required to mount another restructuring exercise through CDR cell if the promoter’s new proposition, if any, is acceptable to them, sources said.
With Kingfisher Airlines grounded, the brand value of the airline has also taken a hit.
It is unlikely that any sizeable amount would get salvaged if bankers were to initiate recovery action today, sources said.
Kingfisher Airlines’ brand was the main collateral that was used for obtaining working capital funding for the private carrier.
The 17-bank consortium had last met in Bangalore in end September.
At that meeting, the bankers had rejected Kingfisher Airlines’ promoter Vijay Mallya’s request to provide a “lifeline” of Rs 200 crore to get all the “grounded aircraft” back into operation.