NDTV has learnt that the State Bank of India will provide Rs 1200 crore relief package to Kingfisher out of which nearly Rs 700 crore will be provided in working capital loans.
The package will include bank guarantee and loan repayment extension, sources said.
This is a significant change of stance from the largest state-owned bank after the bank's chairman had publicly stated that SBI would not provide any additional relief as Kingfisher Airlines was classified as a non-performing asset.
Also, Punjab National Bank is also likely to provide a guarantee of Rs 160-200 crore.
However, SBI denied comment on the latest development. “Cannot comment due to client confidentiality,” SBI Chairman Pratip Chaudhuri told NDTV.
SBI currently has an exposure of Rs 1400 crore to Kingfisher and has classified it as a non-performing asset in the third quarter of this year. Till yesterday, a consortium of 18 banks that have lent to Kingfisher had refused to convert any more loans into equity.
Kingfisher declared losses of 444 crores in Q3 - up from 254 crores a year ago. Kingfisher's current debt is close to 1.3 billion dollars or Rs. 7,057.08 crore. Adding to the woes of the beleaguered airline, the Income Tax department froze its accounts of Friday - a reason airline baron and Kingfisher Chairman Vijay Mallya attributed the chaos to.
The CEO of the airline was summoned by the aviation regulator, the Directorate General of Civil Aviation, on Tuesday after the private carrier cancelled a large number of flights over the weekend that has spilled onto the new week. It also witnessed resignations of at least 34 pilots on Tuesday, with several other staff members being put on notice. The airline, though, assured the DGCA that it had enough cabin crew and pilots to manage its flights. The regulator, meanwhile, has decided to go for "safety surveillance" of all of Kingfisher's operating aircraft but assured that there is no cause for concern and passengers need not be worried.
Out of Kingfisher's 64 aircraft, 28 are operational. Yesterday, at least 34 Kingfisher flights - six from Delhi, five from Mumbai, 18 from Bangalore and five from Hyderabad - were cancelled. On Monday, the airline cancelled 30 flights; half of its flights from major metros were cancelled or delayed on Sunday. Internationally, flight operations to Bangkok, Dhaka and Kathmandu have been shut. Colombo, sources say, will be shut down shortly. Of all Kingfisher Airlines international services, only the London flight is presently operating.