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Kingfisher loan substandard, says Bank of India
The troubles of cash-strapped Kingfisher Airlines worsened on Friday with another lender classifying its loan to the Vijay Mallya-promoted company as "sub-standard", a day after State Bank termed the airline as defaulter.
City-based, state-run lender Bank of India has classified its Rs 575.27 crore loan to the Kingfisher as sub-standard, as the airline has defaulted on repayment.
When contacted, BoI Deputy General Manager (Large Corporates) Bupinder Nayyar, who handles the Kingfisher account, refused to comment. However, a bank official, seeking anonymity, confirmed the development. Bank of India has overall exposure of Rs 4,000 crore to the airline industry.
Kingfisher, which owes Rs 6,419 crore to banks, could not be contacted for response.A bank classifies an account as sub-standard when it is close to the write-off stage. A loan turns into a non-performing asset when the borrower fails to service it for 90 consecutive days. Since Kingfisher had gone for corporate debt restructuring in November, 2010, it gets some additional days to clear the dues and make the loan a standard asset.
State Bank Chairman Pratip Chaudhuri had said on Thursday the Kingfisher account is a non-performing asset (NPA). SBI, the leader of the consortium of banks that have lent to Kingfisher, has the highest exposure (Rs 1,580 crore) to the cash-strapped airline, followed by IDBI Bank (Rs 728 crore), Punjab National Bank (Rs 710.4 crore), Bank of India (Rs 575.3 crore) and Bank of Baroda (Rs 537.5 crore), apart from some private sector lenders.
Altogether, banks have extended nearly loans worth Rs 6,500 crore to the carrier.
Kingfisher reported a net loss of Rs 469 crore for the September quarter, though its revenues rose by 10.2 per cent to Rs 1,528 crore. Last fiscal, it posted a loss of over Rs 1,000 crore.
The airline has been under pressure on account of its huge debt liability, besides increased expenses associated with fuel and operations, and had restructured its loans last year to lower costs. It has also been in talks with banks and some potential investors for fresh funds, but banks are asking for a fresh capital infusion by the promoters before extending fresh loans.
Today's development comes a day after aviation regulator DGCA rapped the airline and state-run low-cost carrier Air India Express for poor safety standards. KF has been given time till Monday to come up with corrective measures.
Kingfisher shares slump
Shares of Kingfisher Airlines on Friday plunged by over 11 per cent in morning trade after State Bank of India, the company's largest creditor, declared its exposure to the air-carrier a non-performing asset.
After a weak start, the shares fell further to an early low of Rs 18.15, down 11.24 per cent over previous close, on the NSE.
On the BSE, the stock fell by 10.75 per cent to an early low of Rs 18.25.
"Kingfisher is a NPA (non-performing asset) for us. They are in default," SBI Chairman Pratip Chaudhuri recently said.
SBI, the leader of the consortium of banks that have lent funds to Kingfisher Airlines, has an exposure of Rs 1,457.78 crore to the struggling firm.
The private carrier is in a financial mess and struggling to service its loans, which have run up to over Rs 6,000 crore By the end of the trading session, shares of Kingfisher Airlines Recouped some of the initial losses and settled at Rs 19.45, down 4.89 per cent from its previous close on the BSE.
During the day, the stock had lost as much as 11 per cent. On the NSE, the stock ended 4.65 per cent lower at Rs 19.50.
In a highly volatile trading session, the BSE benchmark Sensex closed 10.65 points higher.
The troubles of cash-strapped Kingfisher Airlines worsened on Friday with another lender classifying its loan to the Vijay Mallya-promoted company as "sub-standard", a day after State Bank termed the airline as defaulter.
City-based, state-run lender Bank of India has classified its Rs 575.27 crore loan to the Kingfisher as sub-standard, as the airline has defaulted on repayment.
When contacted, BoI Deputy General Manager (Large Corporates) Bupinder Nayyar, who handles the Kingfisher account, refused to comment. However, a bank official, seeking anonymity, confirmed the development. Bank of India has overall exposure of Rs 4,000 crore to the airline industry.
Kingfisher, which owes Rs 6,419 crore to banks, could not be contacted for response.A bank classifies an account as sub-standard when it is close to the write-off stage. A loan turns into a non-performing asset when the borrower fails to service it for 90 consecutive days. Since Kingfisher had gone for corporate debt restructuring in November, 2010, it gets some additional days to clear the dues and make the loan a standard asset.
State Bank Chairman Pratip Chaudhuri had said on Thursday the Kingfisher account is a non-performing asset (NPA). SBI, the leader of the consortium of banks that have lent to Kingfisher, has the highest exposure (Rs 1,580 crore) to the cash-strapped airline, followed by IDBI Bank (Rs 728 crore), Punjab National Bank (Rs 710.4 crore), Bank of India (Rs 575.3 crore) and Bank of Baroda (Rs 537.5 crore), apart from some private sector lenders.
Altogether, banks have extended nearly loans worth Rs 6,500 crore to the carrier.
Kingfisher reported a net loss of Rs 469 crore for the September quarter, though its revenues rose by 10.2 per cent to Rs 1,528 crore. Last fiscal, it posted a loss of over Rs 1,000 crore.
The airline has been under pressure on account of its huge debt liability, besides increased expenses associated with fuel and operations, and had restructured its loans last year to lower costs. It has also been in talks with banks and some potential investors for fresh funds, but banks are asking for a fresh capital infusion by the promoters before extending fresh loans.
Today's development comes a day after aviation regulator DGCA rapped the airline and state-run low-cost carrier Air India Express for poor safety standards. KF has been given time till Monday to come up with corrective measures.
Kingfisher shares slump
Shares of Kingfisher Airlines on Friday plunged by over 11 per cent in morning trade after State Bank of India, the company's largest creditor, declared its exposure to the air-carrier a non-performing asset.
After a weak start, the shares fell further to an early low of Rs 18.15, down 11.24 per cent over previous close, on the NSE.
On the BSE, the stock fell by 10.75 per cent to an early low of Rs 18.25.
"Kingfisher is a NPA (non-performing asset) for us. They are in default," SBI Chairman Pratip Chaudhuri recently said.
SBI, the leader of the consortium of banks that have lent funds to Kingfisher Airlines, has an exposure of Rs 1,457.78 crore to the struggling firm.
The private carrier is in a financial mess and struggling to service its loans, which have run up to over Rs 6,000 crore By the end of the trading session, shares of Kingfisher Airlines Recouped some of the initial losses and settled at Rs 19.45, down 4.89 per cent from its previous close on the BSE.
During the day, the stock had lost as much as 11 per cent. On the NSE, the stock ended 4.65 per cent lower at Rs 19.50.
In a highly volatile trading session, the BSE benchmark Sensex closed 10.65 points higher.
