India?s 7% GDP growth amid the global downturn has made international banks, which have of late intensified scrutiny on borrowers, bullish on the country. According to experts, this may remove roadblocks for Air India to procure 85% of its loan from the US Exim Bank for acquiring 68 aircraft at a total cost of $11.5 billion.

Dinesh Keskar, senior vice-president, sales, Boeing, told FE, ?The US Exim Bank has given a loan for over 20 aircraft which have already been delivered to the carrier by Boeing. The bank has given preliminary commitment for deliveries. Looking at the track record of Air India and India?s healthy growth rate when the global finance markets are in a turmoil, there will not be any hurdle in getting a final commitment from the bank to finance the remaining aircraft which will be delivered by 2011.?

Air India has been consistently in talks with the government to get a bailout package of Rs 4,550 crore to meet its working capital requirements and pay for aircraft deliveries due from February. The carrier is also in talks with several commercial banks to finance the remaining 15% cost of aircraft.

However, an analyst with a Mumbai-based broking firm

has said that the Exim Bank had filed a case against Singapore-based paper products maker Asia Pulp Co Ltd in February 2008 for loan default.

?But this will not be the case with Air India since it has always paid its tranches on time. Also, the bank scrutinises the credit standing of the borrowing company on regular intervals and also the country?s economic stability before sanctioning a huge loan amount,? said the analyst.

According to international media reports, the US Exim Bank has recently set a target of granting $6 billion through letters of credit to Indian carriers for the purpose of acquiring aircraft from US-based airplane manufacturers.

The report also states that, in the next five years, India will overtake Mexico as the largest market for the US Exim Bank, a milestone that bank chairman and president James Lambright attributed to the vast sums of money that the country is investing in its infrastructure.

The bank has outstanding loans of approximately $3.5 billion

to India and expects to approve

another $6 billion funding for the country by 2013. In contrast, it has about $7 billion outstanding loans to Mexico.

Air India is aiming for a fleet strength of 200 aircraft in order to match its peers such as Lufthansa, Singapore Airlines, British Airways and Emirates. The carrier is presently in the process of acquiring 111 Boeing and Airbus aircraft which will take its fleet strength to 140 after phasing out some of its old aircraft by 2011.

Money trail

• Air India one of the biggest customers of Exim Bank

• Flag carrier has never defaulted on loan re-payments earlier

• Stable Indian economy gives positive outlook to international financial institutions lending money

• US Exim Bank has given loan for over 20 aircraft

• Recently set target of granting $6 billion through letters of credit