According to the RBI deputy governor, debt-laden Kingfisher Airlines, which owes 17 banks about Rs7,000 crore, does not pose any systemic risk to the banking system
Mumbai: The debt-laden Kingfisher Airlines, which owes 17 banks about Rs7,000 crore, does not pose any systemic risk, reports PTI quoting Dr KC Chakrabarty, deputy governor of the Reserve Bank of India (RBI).
When asked about the troubles at Kingfisher Airlines, Chakrabarty said that "it does not pose any systemic risk to the banking system".
He was talking to reporters on the sidelines on an SME event organised by the Bombay Chamber of Commerce and Industry.
The aviation regulator DGCA had recently served a show-cause notice to the company asking why its licence should not be revoked.
Within the lenders consortium, SBI has the single largest exposure with Rs1,580 crore, followed by IDBI Bank (Rs720 crore), Punjab National Bank (Rs435 crore), Bank of India (Rs575 crore), Bank of Baroda (Rs530 crore), Central Bank of India (Rs420 crore), UBI (Rs350 crore), Corporation Bank (Rs150 crore), and Federal Bank (Rs80 crore which is not a loan but an en-cashed bank guarantee to BPCL).
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There is no risk as long as bankers act like bankers.Enforce securities offered and proceed against Dr Vijay Mallya who has given his personal guarantee.Surely he is worth more than the amount owed to the banks.
Start selling his mansions,IPL Franchise, UB city,yachts,shares of various group companies, enforce corporate guarantees of the group, declare the group as NPA.Why not??Why the hesitation!!
If the banks act tough, money is secure .That is where the systemic endurance comes into play.
Moneylife, please keep following up on what the banks propose and what they do to recover money from KFA.
If they write off, then it is at the cost of the poor depositors of these banks.