RBI asks banks to help airlines

Sep 08, 2010 |

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Mumbai, Sept. 8: RBI has asked lenders to work out a special concessional package for the crisis-ridden aviation sector, reeling un-der financial debt burden of a staggering `60,000 crore.

In response, banks said they would look into the problems of airlines on case-by-case basis.

The airline industry is facing mounting debts due to the economic downturn and resultant excess capacity, which still exists. Of late, the industry has been showing signs of recovery, which could gather pace if banks restructure loans.

According to an estimate, the cumulative debt of the airline sector stands at about `60,000 crore. As of March, 2010, Air India had about `40,000 crore debt, while Kingfisher had a debt of about `6,000 crore. “The RBI has allowed in the case of aviation sector a special concession,” SBI chairman and managing director, Mr O.P. Bhatt, said.

The RBI had sent a communication to the banks with regard to debt restructuring for airlines in the last week of August.

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