Rs 6,000 crore to Rs 9,000 crore: Kingfisher Airlines' dues grew 50% in 5 years

MUMBAI: The delay in recovery of Kingfisher Airlines' loans is costing lenders half as much as the bad debt itself. This can be seen from the extent to which the amount due has snowballed from less than Rs 6,000 crore to over Rs 9,000 crore in five years. In the interim, several movable assets - such as small aircraft and vehicles - have been all but reduced to scrap .

RBI governor Raghuram Rajan had created a new category for borrowers like Vijay Mallya, terming them 'non-cooperative' and said that banks should be careful in lending to them. He defined a non-cooperative borrower as the one who does not pay dues on time despite having the ability to do so, thwarts lenders' efforts for recovery by not providing necessary information sought, denies access to assets financed or collateral securities, and obstructs sale of securities using legal loopholes.

In 2011, then minister of state for finance Namo Narian Meena had announced in Parliament that a consortium of 17 PSU banks had an exposure of Rs 5,793 crore to KFA, and Rs 1,109 crore through investment in preference shares.

The total debt was reduced to Rs 6,007 crore after banks converted Rs 1,400 crore of debt into equity by subscribing to shares at a 60% premium in April 2011. The conversion (at a six-month average price) was based on prevailing Sebi norms and resulted in banks losing almost Rs 875 crore due to the conversion.

In February 2013, after the restructuring failed to get KFA back on track, lenders decided to recall the loans. Since then, banks in their notices issued under the Sarfaesi Act, which allows lenders to attach assets of defaulters, have been stating that the amount due is Rs 6,963 crore as on January 31, 2014.

Earlier this month in a statement in Parliament, finance minister Arun Jaitley said that dues from KFA were over Rs 9,000 crore. These dues that are being discussed are only that of the banks in the consortium. Added to that are the claims from tax authorities, aircraft financiers, employees and airport authorities.