Taking Jet Airways to NCLT was last resort: SBI chairman

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Mumbai | Published: June 21, 2019 1:36:48 AM

Taking Jet Airways to the National Company Law Tribunal (NCLT) for insolvency proceedings was the last resort left to lenders, State Bank of India (SBI) chairman Rajnish Kumar said on a day the tribunal admitted the lender’s application against the grounded airline.

There are cogent reasons for what lenders are doing. Every decision has been taken after a lot of due deliberations, said Rajnish Kumar, SBI Chairman.

Taking Jet Airways to the National Company Law Tribunal (NCLT) for insolvency proceedings was the last resort left to lenders, State Bank of India (SBI) chairman Rajnish Kumar said on a day the tribunal admitted the lender’s application against the grounded airline.

“We have already clarified that under what circumstances the resolution under the IBC (Insolvency and Bankruptcy Code) was the only choice. There are cogent reasons for what lenders are doing. Every decision has been taken after a lot of due deliberations,” Kumar said on the sidelines of the bank’s annual general meeting (AGM).
He added that this is the first case of bankruptcy in the aviation sector and as such, the proceedings and legal principles that emerge as a result of it will be closely watched.

In response to queries from shareholders at the AGM, Kumar is understood to have said that SBI had a Rs 10,000-crore exposure to Dewan Housing Finance (DHFL), which has been downgraded recently to default grade by multiple rating agencies.

Managing director Arijit Basu is holding meetings every week on the DHFL matter, he assured shareholders.

Speaking to reporters, Kumar observed that the new Reserve Bank of India (RBI) circular on stressed assets resolution entails a relook at all existing accounts. “All the accounts referee to NCLT under February 12 guidelines of Reserve Bank of India, they need a relook. For those accounts we have to again review as per the June 7 resolution framework of the RBI,” he said.

The inter-creditor agreement (ICA) signed in 2018 will require some amendments to suit the new set of regulatory guidelines, Kumar said. “The very fact that ICA or the RBI framework itself that provides that within 30 days itself you have get the ICA signed. If some lenders don’t sign then the remaining lenders will have to take a call that what should be done,” he told reporters, adding that it is quite clear from the RBI guidelines that the central bank means to protect the interests of the majority lenders as well as that of minority lenders.

Shareholders also raised queries about SBI’s asset quality position in general and the recovery efforts it is making. “By and large our shareholders were pleased with the performance of the bank. There was a little bit of disappointment, naturally, (because this is the) second year when we could not give dividend,” Kumar said.

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