SEBI: Guidelines regulating advisors

On 13th December, capital market regulator SEBI said it will soon come out with norms for the...

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Kingfisher is an NPA: SBI chief Pratip Chaudhuri

SBI, the leader of the consortium of banks that have lent funds to Kingfisher Airlines, has an exposure of Rs1,457.78 crore to the struggling airline. It is followed by IDBI Bank (Rs727.63 crore), Punjab National Bank (Rs710.33 crore), Bank of India (Rs575.27 crore) and Bank of Baroda (Rs537.51 crore)

New Delhi: State Bank of India (SBI), cash-strapped Kingfisher Airlines’ largest creditor, on Thursday called the Vijay Mallya-led air-carrier a non-performing asset, reports PTI.

“Kingfisher is a NPA (non-performing asset) for us. They are in default,” SBI chairman Pratip Chaudhuri told reporters here.

SBI, the leader of the consortium of banks that have lent funds to Kingfisher Airlines, has an exposure of Rs1,457.78 crore to the struggling firm. SBI’s exposure is the highest among any of the lenders to the airline, followed by IDBI Bank (Rs727.63 crore), Punjab National Bank (Rs710.33 crore), Bank of India (Rs575.27 crore) and Bank of Baroda (Rs537.51 crore).

The private carrier is in a financial mess and struggling to service its loans, which have run up to over Rs6,000 crore.

Kingfisher reported a net loss of Rs469 crore for the July-September quarter of the current fiscal, though its revenues rose by 10.2% to Rs1,528 crore. In the last fiscal ended 31 March 2011, it posted a loss of more than Rs1,000 crore.

Late last year, Kingfisher announced various business rationalisation initiatives, including phasing out of its low-cost Kingfisher Red service and reconfiguration of its fleet.

The airline has been under pressure from its huge debt liability, besides increased expenses associated with fuel costs and operations, and had restructured its loans last year to lower costs.

It is also said to be in talks with banks and some potential investors for fresh funds.

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RBI raises FCCB limit to $750 million

The RBI on Thursday raised the annual limit of FCCBs for companies to $750 million under the automatic route, up from $500 million in a fiscal year, to help Indian corporate across all segments access higher quantum of overseas funds and also encourage greater inflow of foreign exchange

Mumbai: The Reserve Bank of India (RBI) on Thursday raised the annual limit of Foreign Currency Convertible Bonds (FCCBs) for companies to $750 million under the automatic route, which does not require prior permission from it, reports PTI.

The limit, up from $500 million in a fiscal year, will not only help Indian corporate across all segments access higher quantum of overseas funds but also encourage greater inflow of foreign exchange.

“...eligible borrowers under the automatic route can raise FCCBs up to $750 million or equivalent per financial year for permissible end-uses,” the Reserve Bank said in a circular.

Corporates in specified service sectors like hotels, hospitals and software, can raise FCCBs up to $200 million subject to the condition that the proceeds would not be used for acquisition of land.

RBI’s decision comes a few months after the government decided to relax norms on External Commercial Borrowings (ECBs). In September, the limit of ECBs with tenure of five years or more under the automatic route was increased from $500 million to $750 million.

For the services sector, the ECB limit under automatic route was doubled to $200 million and for NGOs from $5 million to $10 million.

This was done following suggestions made by top industry leaders at a meeting with finance minister Pranab Mukherjee to boost the economy.

The RBI circular further said, “... it is clarified that the ECB/FCCB availed of for the purpose of refinancing the existing outstanding FCCB will be reckoned as part of the limit of $750 million available under the automatic route as per the extant norms.”

It also said henceforth ECBs of up to $20 million or equivalent in a financial year will have a minimum average maturity of three years, while for ECBs of $20-$750 million the average maturity would be of five years.

“Accordingly, the requirement of average maturity period, prepayment and call/put options... (for additional amount of $250 million) has been dispensed with,” the circular said.

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