Recovery of dues to take time as banks may not be able to monetise collateral
The members of consortium of lenders to the Kingfisher Airlines have started the process of liquidating its assets to recover their dues. Speaking to Financial Express on Thursday, a top official from Bank of India, which is part of the core group of lenders, said the banks had initiated the process a week ago, but have not sold any assets till date.
However, lenders contend that they may not be able to monetise collateral to recover a part of their loans in the current quarter with the process taking more time than expected. The consortium of lenders, led by State Bank of India (SBI), had said a month ago they were hopeful of recovering at least R1,000 crore in the current quarter from collateral which includes shares of United Spirits (USL) and Mangalore Chemicals and Fertilizers, both part of the UB Group.
?I am not very hopeful that anything will happen this financial year as it is already mid-March. We are in the process of receiving the call-up authorisation from other banks,? Shyamal Acharya, the deputy managing director (Accounts), SBI, said on Thursday. ?It is a complicated account and there are several things that need to be taken care of. This is not a single one-on-one loan.?
The consortium had decided in February to recall loans to Kingfisher and had constituted a core group to go into the legal aspects of monetising the collateral. ?The core group will take a call on this,? said an official with another bank, adding that selling of shares was a relatively easy method of monetising securities. Among other securities, the bankers hold about 2.6 million shares of USL, which were given as collateral during the Kingfisher debt recast done in 2010, and which would be valued at about R500 crore at current share price levels.
On February 15, UB Group had said it had not received any formal communication from the banks in this regard. ?We are discussing with them on ways to bring down their exposure, interalia, from the proceeds of the Diageo transactions,? a group spokesman had said.
UK-based Diageo?s move to take a majority stake in USL, in a deal valued at $2.1 billion, recently received the green signal from the Competition Commission of India.
Prolonged agony
* Consortium of lenders had said they were hopeful of recovering at least R1,000 crore in the current quarter from collateral
* Lenders had decided to recall loans and constituted a core group to go into legal aspects of monetising the collateral
* Banks hold 2.6 million shares of USL which were given as collateral during the Kingfisher airlines? debt recast done in 2010
