BoB makes provision of ₹500 cr for Go Air risk
1 min read 16 May 2023, 10:45 PM ISTAccording to Chadha, BoB had extended loans of around ₹1,300 crore to Go Air, excluding government-guaranteed exposure
PremiumMUMBAI : State-owned Bank of Baroda, has allocated ₹500 crore as a provision against any potential losses from its exposure to Go Airlines (India) Ltd, said Sanjiv Chadha, the bank’s chief executive officer, on Tuesday.
According to Chadha, BoB had extended loans of around ₹1,300 crore to Go Air, excluding government-guaranteed exposure. “Out of this, about ₹1,000 crore is collateralized by tangible security and corporate guarantees. We have in this quarter gone ahead and made provision of ₹500 crore for this account," he said adding it has accounted for potential downside risks, ensuring full protection for BoB regarding this account.
“We have always been proactive in taking any provisioning which is required and that is why our credit cost has come down. Usually, we do not comment on specific accounts, but in this case, we will make an exception because the company has made a filing and the figures are public knowledge."
The principal bench of the National Company Law Tribunal (NCLT) admitted Go Airlines’ insolvency application on 10 May. Earlier, the airline had announced its decision to approach the insolvency tribunal, terming it a result of the “ever-increasing number of failing engines supplied by Pratt and Whitney’s International Aero Engines, LLC".
This, it had said, resulted in the airline having to ground 25 aircraft as of 1 May.
