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SBI: Banks Have Rs 6.5k Cr Collateral From KFA, Promoters

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SBI has said the 17 bankers, who have a cumulative outstanding of over Rs 7,000 crore from the grounded Kingfisher Airlines, are holding collateral worth at least Rs 6,500 crore from the airline, group companies and personal guarantees of promoter Vijay Mallya.

"If we include the value of the guarantees of UB Holdings (the holding company of KFA) as well as the personal guarantees of Mallya, the value of the collaterals available will be around Rs 6,500 crore. I am not including the value of the Kingfisher brand," SBI Deputy Managing Director in charge of mid-corporates Shyamal Acharya told a TV channel.

The 17 banks have an exposure of Rs 6,360 crore to the troubled carrier, excluding the unpaid interests since January 2012, and the compounded interest thereon, taking the total dues to around Rs 7,500 crore.

SBI, the leader of the consortium of lenders, has the highest exposure with Rs 1,600 crore, followed by Punjab National Bank at Rs 800 crore, IDBI Bank at Rs 800 crore, Bank of India at Rs 650 crore and Bank of Baroda at Rs 550 crore.

Kingfisher has been grounded since October 1 last after a labour unrest due to non-payment of salaries.

Banks were hopeful that some money would flow into the airline after Mallya sealed Rs 11,170 crore Diageo deal by selling majority stake in his liquor business United Spirits.

Mallya had, however, said these are two different companies.

The lenders were also banking on some equity infusion into the airline by a foreign player following the enabling regulatory environment, but the airline has not been able to find an investor so far.

All the 17 banks have provided for their exposure to the airline and declared them as bad loans. Since January 2012, the airline has not been servicing the loan.

The airline is sitting on a debt of over Rs 7,500 crore in banks loans, and over 10,000 crore in accumulated losses and unpaid salaries, taxes, and vendor dues.

Refusing to give a timeline for recovery, he said the shares of United Spirits and Mangalore Chemicals and Fertilizers are "low hanging fruits" which will be sold off first, preferably in this quarter itself.

The statement comes amidst reports yesterday that banks would have to take a massive haircut on their exposure to the airline if they choose to go in for recovery.

Despite this assurance from lead lender SBI in the morning, SBI counter was down 1.8 per cent at Rs 2,255.05, the sectoral `Bankex' index shed 0.22 per cent against the overall market gain of 0.24 per cent.

Acharya said the bankers have pooled in all the collateral they had into a security trustee and the amount which will be recovered henceforth will go into the common pool and get divided among the banks as per their share of outstanding.

A core group of bankers, formed after the bankers' decision to go in for recovery on the Kingfisher account yesterday, will chart the way forward, he said.

The core group had its first meeting today to discuss the way ahead at SBI headquarters. "It will be a long process of recovery from here on for the bankers and may take months," an SBI official who was present said later.

Banks also have a "residual share" in collaterals held by Srei Infrastructure Finance, which bought ICICI's outstanding last year, Acharya said, adding that up to Rs 450 crore can be recovered from this route, after it (Srei) recovers its outstanding of Rs 436 crore.