Photo: Mint
Photo: Mint

Four banks plan to sell Kingfisher Airlines’ assets to ARCs

Led by State Bank of India, the 17-bank consortium is struggling to recover Rs6,963 crore from Kingfisher Airlines

New Delhi: As many as four banks are contemplating selling assets of Kingfisher Airlines to asset reconstruction companies (ARCs) to recover part of their dues.

Led by State Bank of India (SBI), the 17-bank consortium is struggling to recover 6,963 crore debt due from Kingfisher Airlines.

“Three-four banks are looking for stake sale to ARCs to realize some value out of Kingfisher Airlines assets that they posses," said a person who has knowledge of the matter and who declined to be name.

Without disclosing the names of the banks, people familiar with the matter said these lenders are weighing options and are in talks with ARCs.

Earlier this week, Punjab National Bank (PNB), one of the banks of the consortium, declared Kingfisher Airlines, its guarantors Vijay Mallya and United Breweries (Holdings) Ltd as wilful defaulters. PNB became the third public sector lender to declare the air carrier a wilful defaulter. Earlier, United Bank of India and SBI had done the same.

As per the Reserve Bank of India guidelines, once declared as wilful defaulters, no additional facilities will be granted to these borrowers by any bank or financial institution. Besides, such companies and promoters will be debarred from institutional finance for floating new ventures for a period of five years from the date of removal of their name from the list of wilful defaulters.

SBI has the highest exposure of 1,600 crore to Kingfisher Airlines. Other banks that have exposure to the airline include PNB and IDBI Bank ( 800 crore each), Bank of India ( 650 crore), Bank of Baroda ( 550 crore) and Central Bank of India ( 410 crore).

UCO Bank has to recover 320 crore, Corporation Bank ( 310 crore), State Bank of Mysore ( 150 crore), Indian Overseas Bank ( 140 crore), Federal Bank ( 90 crore), Punjab & Sind Bank ( 60 crore) and Axis Bank ( 50 crore).

As part of the recovery process, the SBI-led consortium has decided to auction Kingfisher House in Mumbai next month. SBICAP Trustee Co. Ltd, which took possession of the property last year, will do the e-auctioning of the 2,401.70 sq. metres property on 17 March. The trustee company has kept reserve price of 150 crore and the bid increment amount is 5 lakh. PTI