Yet no decision on loans to Kingfisher Airlines by SBI

Kingfisher, the downing on ground career, should have raise its equity itself, if it wants fresh loans from State Bank of India (SBI) for reengineering its business process, as stated by a senior officer of the state-owned bank.

Deputy managing director R Venkatachalam announced firm statement about riding to Kingfisher‘s rescue on Saturday, he said, “In all these cases it can’t be one-sided. They have to get the capital first. Without that it will definitely be difficult for banks to lend. ”

He further said, “Everything depends on equity infusion – how much comes in, whether that will meet the requirements. First it has to come.”

On Saturday, Pratip Chaudhuri, Chairman of SBI also dismissed all earlier reports of the bank having decided to provide over Rs 1,500 crore as assistance to cash-strapped Kingfisher.

From last many months, KFA is facing disruption in its flight operations and because of it several flights has been cancelled day to day operations, along with the resignation of dozens of its pilots. To resolve this problem, the cash scrapped airline requested for Rs 20-30 billion ($409-613 million) in loans from banks to carry out its day-to-day operations.

KFA’s balance sheet account is also dealt with a non-performing asset with a lot of banks, therefore SBI is studying a viability report prepared by its investment banking arm, SBI Capital Markets.

And on basis of this viability study, any decision on further lending to Kingfisher will be taken as well as conditional on an infusion of funds into the airline.

It has also indicated that SBI can’t take step to rescue Kingfisher; the strongest reason is that of owning about one-fifth of its equity and three-quarters of its debt by state-run banks.

The above also indicated by Venkatachalam’s statement in which he said, “Once Kingfisher airlines finalize equity we can sit and study the position and then make a decision.

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