Trouble continues for Kingfisher: Banks reluctant to lend more

There seems to be no end to the troubles of cash-strapped Kingfisher Airlines (KFA) with bankers insisting that they would not pump in any money in the air carrier unless the promoters infuse fresh equity. 

Several banks said on condition of anonymity that it makes no sense for a banker to get fingers burnt again by lending to a borrower that is losing huge sums of money every month. 

"Why should a bank lend more to a company that has burned over Rs 1,000 crore this fiscal?", a senior official of the Delhi-based public sector lender Punjab National Bank (PNB) said.


The official said this while referring to the about Rs 900-crore loss that Kingfisher has suffered during the last two consecutive quarters ending December 2011. 

PNB, a member of the 18-bank consortium that has provided funds to the airline, has to make a provision of Rs 435 crore on account loans given to Kingfisher turning bad. 

When asked if banks will let the airline to go belly up, and lose its entire exposure, the official said, "there is no question of banks losing a penny as there are many securities which banks have from the company." UCO Bank chairman and managing director Arun Kaul said, "The bank has declared Kingfisher account as NPA...We would like this account to be regularised if any further request (for loan) is to be entertained." 

Kaul further said, "There is no decision as yet (on providing fresh loans)." 

A consortium of 18 bankers including 14 state-owned lenders and four private banks have provide huge sums to the beleaguered airlines which has a total debt of about Rs 7,057 crore and accumulated losses of about Rs 6,000 crore.