SBI Throws A Lifeline Worth Rs 1,500 Crore To Cash Struck Kingfisher Airlines (22-Feb-2012)
The government-owned State Bank of India (SBI) has reportedly extended a relief package amounting to Rs 1,500 crore to the cash struck Kingfisher Airlines, in a move that amounts to throwing good money after bad. Post this arrangement, SBI's exposure to Kingfisher Airlines now adds up to Rs 3,100 crore, which includes Rs 1,457 crore, Rs 182 crore of equity and Rs 1,500 crore of fresh bailout.
Out of the relief package, SBI's first tranche of Rs 700 crore will come as short-term working capital to meet the loss-making airline's immediate requirements for paying salaries, tax dues and provident fund payments as well as clearing outstanding arrears of vendors and oil marketing companies.
Additionally, Rs 500 crore will be provided as bank guarantees. Loans worth Rs 200 crore, that are due for repayment shortly, too will be rolled over. Further, Rs 150 crore will be provided as guarantees to the income tax department.
The income tax (IT) department also has softened its stand and unfroze the airline's bank accounts as part of the bailout package for the loss-making carrier. The airlines owes as much as Rs 53.8 crore for financial year 2011 to the I-T department and Rs 100 crore for financial year 2012. Contrary to this, government has maintained that it has no plans to give a bailout package to Kingfisher Airlines.
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