SBI runs out of patience, talks of Kingfisher loan recall

A possible end to the two-year-long Kingfisher saga is visible after the SBI -led consortium of lenders decided to recall loan given to the troubled airline. Most analysts were expecting the banks to take this drastic step and say the focus now will be on liquidation of assets. The Kingfisher stock took a severe beating on Wednesday.
 
Seventeen banks have an exposure of Rs 7,000 crore to Kingfisher Airlines, in which SBI's share of Rs 1400 crore is the largest. Some of the other banks with exposure to KFA are Bank of India (Rs 575 crore), IDBI (727 crore), Punjab National Bank (Rs 710 crore) and Bank of Baroda (Rs 530 crore).

SBI officials say banks have given enough time to Kingfisher to repay its dues but the Vijay Mallya-led company had shown little efforts in reviving the airline. The fact that Kingfisher could not provide concrete tmeline for its revival plan had upset all the lenders. Kingfisher had stopped flying since October 1, 2012 after a series of strike hit operations. The airline's flying licence has been suspended by the aviation regulator.

In a CNBC-TV18 interview, SBI's Deputy Managing Director Shyamal Acharya said he was expecting some amount of recovery in this quarter itself. He said the consortium has the shares of United Spirits as collateral which is valued at Rs 6,500 crore. This does not include the Kingfisher brand. It may be recalled that Kingfisher Airlines Chairman Vijay Mallya has given personal guarantee for the loans and Acharya is prepared to go to court to process personal guarantee collaterals.

"Personal guarantee basically covers the entire personal wealth of the guarantor. If somebody gives a personal guarantee for a loan and if that loan is not repaid then the guarantor becomes liable to repay the loan - that is how it works."

Acharya said SBI has provided for 95 percent of total Kingfisher loan exposure. About 25 percent of SBI's total loan exposure is towards Kingfisher.

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Go to next page and read the edited transcript of Archarya's interview.