The consortium of lenders to Kingfisher Airlines (KFA) will file a claim under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act in a day or two. But it seems unlikely banks will be able to recover a meaningful chunk of their dues of Rs7,000 crore any time soon.
In February, State Bank of India (SBI) deputy MD Shyamal Acharya had said banks held collateral worth Rs6,500 crore against loans to Kingfisher Airlines. This included the Kingfisher brand, limited to the airline, which, according to media reports, was valued at around Rs4,100 crore by audit firm Grant Thornton India at the time the loan was given.
?Now in case of airlines we have to see; we have not ascertained the value of the brand yet. Since it is not flying now, the value might be much less,? Acharya told FE on Thursday. Acharya also said that the consortium will be filing a case with the debt recovery tribunal (DRT) next week.
?We are looking to see what we can recover quickly but the promoter could adopt delaying tactics,? he said. SBI, the lead lender in the 14-bank consortium, has an exposure of Rs1,600 crore to the bankrupt airline.
Under Sarfaesi, lenders can take possession of the fixed and current assets of borrower after 60 days of sending notice, while through the DRT, lenders can use judicial powers against the borrowers. Acharya expects this to be a protracted battle.
The consortium has sent loan recall notices to the promoters, Acharya said. United Breweries and Vijay Mallya are guarantors for the loan. Lenders can invoke guarantees to the extent that the outstanding loans are cleared.
Apart from Rs680 crore recovered from the sale of shares of United Spirits, Mangalore Chemicals & Fertilisers and Kingfisher Airlines, the consortium hasn?t been able to cash in on other collateral.
?There has been no change to talk about in the recovery process. We are looking to make some recoveries but so far, nothing has happened,? Bank of India ED N Seshadri told FE.
BoI?s exposure to the carrier is Rs650 crore.
Apart from the shares and the Kingfisher brand, the lenders also holds two real estate properties and two helicopters as collateral.
?When banks had gone ahead with a legitimate process of recovering their loans by means of share sale, he (Mallya) had created hurdles by filing a case against us. We expect more such hurdles from him going ahead,? said another senior banker.
In April, Mallya had filed a petition in the Bombay High Court against lenders for selling a portion of the pledged shares of USL. However, within a day, the court allowed banks to go ahead with the share sale as planned.