Bank of India says KFA loan 'sub-standard'/news07012012

The troubles of cash-strapped Airlines");'> Kingfisher Airlines (KFA) worsened with another lender classifying its loan to the Vijay Mallya-promoted company as 'sub-standard', a day after State Bank of India termed the airline as defaulter.

City-based, state-run lender Bank of India (BoI) has classified its Rs575.27 crore loan to the KFA as sub-standard, as the airline has defaulted on repayment.

When contacted, BoI Deputy General Manager (Large Corporates) Bupinder Nayyar, who handles the KFA account, refused to comment. However, a bank official, seeking anonymity, confirmed the development. BOI has overall exposure of Rs4,000 crore to the airline industry.

KFA, which owes Rs6,419 crore to banks, could not be contacted for response.

A bank classifies an account as sub-standard when it is close to the write-off stage. A loan turns into a non-performing asset when the borrower fails to service it for 90 consecutive days.

Since KFA had gone for corporate debt restructuring in November, 2010, it gets some additional days to clear the dues and make the loan a standard asset.

Yesterday, State Bank Chairman Pratip Chaudhuri said the KFA account was a non-performing asset ( NPA).
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