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Banks have kicked off the process of recovering loans of nearly Rs 8,000 crore from troubled Kingfisher Airlines (KFA). The 17-member bank consortium has formed a sub-core group of four banks, which include State Bank of India (SBI), IDBI Bank, Punjab National Bank and Bank of India to oversee the recovery of loan.
“The sub-group will decide the future course of action. They will meet frequently keep individual banks posted about the recovery process. We think quite a few collaterals are recoverable in KFA. Every bank has a legal right on the collaterals,” said a banking industry source.
Banks on Tuesday decided to recall their loans given to KFA as the troubled carrier has not been able to come up with a viable business plan to stay afloat and the promoters have failed to infuse fresh equity.
SBI with over Rs 1,400 crore has the maximum exposure in the airline. There’s apprehension among bankers that collateral given by the promoters and directors of Kingfisher may not be enough if banks resort to recovery by sale of assets and other measures.
“The sub-group will first examine all the documents related to collaterals. Later, it will appoint a law firm to carry out and advise on the entire loan recovery process. However, the four-member group has not yet sent any notice of recovery to the company,” said a banker.
“Four banks have been chosen based on their respective credit exposure,” said another banker who attended the meeting.