In what might further muddy the recent controversy over banks’ exposure to airline companies, state-owned IDBI had lent Rs 900 crore to Vijay Mallya-owned Kingfisher Airlines in 2009.
Sources say the bank financed the airline against the recommendation of its own internal rating committee. Interestingly, S Ananthakrishnan, the then ED, and in charge large corporations, has been transferred to the training department.
Anathakrishna has been replaced by Vinay Kumar. The reshuffle was initiated by Yogesh Aggarwal, the then CMD.
Aggarwal is now the chairman of Pension Fund Regulatory & Development Authority (PFRDA).
Bank officials defend its exposure for Kingfisher and said no norms were violated, while sanctioning the loan and it was just a part of the consortium for the loan, led by State Bank of India. IDBI bank was a part of the consortium of banks that had financed the debt-heavy private sector airline, Rs 2,000 crore in two tranches.
In the first tranche, the bank had lent Rs 150 crore, which was a short-term loan and has already been repaid by the company. However in the second tranche of loan amounting to Rs 750 crore, is a long-term loan and supposed is to be repaid five years. The repayment is yet to begin.
BK Batra, executive director and head corporate banking, IDBI Bank, told FE: ?As usual, we had undergone internal rating before finalising the loan and there were certain risks that had been pointed out by the rating instrument too?. However Batra defending the Kingfischer Airlines exposure said that taking risk is a part of bank’s job. ?We have not violated any norms while disbursing the loan to the company,? said Batra.
Asked to comment about the reshuffle of the post, Batra said that it was a routine matter and hence had nothing to do with the episode.
SBI officials maintained the only bad loan in aviation sector for the bank -worth Rs 60 crore -had been given to Paramount Airways.
The official hoped that the RBI will soon come up with certain guidelines for handling aviation sector exposures.