State Bank of India has ruled out extending any fresh loans to the debt-laden Kingfisher Airlines. However, it is also not looking to sell any of its existing loan exposure in Kingfisher Airlines, as it is hopeful that the beleaguered airline will turn around.
“Kingfisher (Airlines) continues to be a NPA even today. Their capital is already negative. We can't consider any fresh credit unless they bring in more capital. We still have faith in the company,” Mr Pratip Chaudhuri, Chairman, SBI, told reporters after a pre-Budget meeting with the Finance Minister, Mr Pranab Mukherjee, at North Block on Thursday.
He also said that SBI was working with the airline as the account was in default and some guarantees had been invoked. He felt that the airline should be able to come out of its current troubles with more favourable conditions and a good business model.
SBI is the lead bank in the consortium that has funded the private airline. The country's largest commercial bank has an exposure of Rs 1,458 crore to Kingfisher Airlines, which is struggling to service some of its debt.
The Vijay Mallya-promoted carrier is understood to have total debt of about Rs 7,057 crore in its books. On Air India, Mr Chaudhuri said that the airline was a Government company and that he was at a comfort level that was total and complete. Air India has a total debt of Rs 43,000 crore, half of which is guaranteed by the Government. Recently, the RBI had given its nod for a debt restructuring package to the tune of Rs 18,000 crore.
On his expectations for the RBI policy review on January 24, Mr Chaudhuri said that he did not expect any repo rate cut in the policy. The RBI may not cut the Cash Reserve Ratio (CRR) as it would have a direct impact on liquidity, he said.
SBI is also not facing any NPA problem in the power sector, he said. The bank expects robust net interest margins for the third quarter ended December 2011.
krsrivats@thehindu.co.in