Lenders okay Air India's debt restructuring plan: Sources

Moneycontrol Bureau

Air India's lenders have approved the airline's debt restructuring plan of around $400 billion by March 20, reports CNBC-TV18, quoting sources. A consortium of 13 banks led by State Bank of India had earlier deferred the proposal as they were reluctant to accept equity in the airline.

Now, since the banks have finally come to a conclusion to help the carrier, they would need approvals from the government and the Reserve Bank of India (RBI), which would be done by next month.

However, an RBI official told Moneycontrol.com that the central bank's approval was not required.

"RBI is not supposed to give approval to banks' debt restructuring scheme for Air India. At the most, banks can request the regulator for not treating AI account as non-performing asset even if it stops repayment after 90 days. If AI remains a standard asset, banks can extend further credit to it," said the official who did not want to be quoted.

Banks cannot lend to any company which is classified as a non-performing asset. (Air India is not yet a non-performing asset) There is a good possibility that the RBI would accede to banks' request for a special dispensation for provisioning for the national carrier's loans, since AI being a government owned company, could provide sovereign guarantee.

CNBC-TV18 sources say amongst many options discussed by the lenders, one of them is that lenders will pump in Rs 7400 crore  through a non-convertible debenture (NCD) issue and the balance of around Rs 11000 crore will come in via long term loan and working capital.