SBI chairman defends sending Jet Airways to bankruptcy court, says 'last effort' to find resolution

Mumbai: State Bank chairman Rajnish Kumar on Thursday defended the lenders' decision to take Jet Airways for bankruptcy saying "it was their last effort to find a resolution" for the grounded airline and also did not rule out the possibility of liquidation.

 SBI chairman defends sending Jet Airways to bankruptcy court, says last effort to find resolution

Representational image. Reuters.

Earlier this week, SBI-led consortium of 26 lenders had decided to seek resolution under IBC as they had received only a conditional bid. The statement comes on the day when the Mumbai bench of the NCLT admitted lenders' plea for insolvency for the airline which stopped flying from 17 April.

"Taking Jet Airways to the NCLT is the last effort to find a resolution. There are cogent reasons for what the lenders are doing. Every decision has been taken after a lot of due deliberations," Kumar told reporters on the sidelines of the 64th AGM of the lender. He said Jet Airways is the first case of bankruptcy in the aviation sector, which will be tested.

"We will have to see how does it proceed and what the legal principle gets laid out," he added.

On whether they expect even liquidation of the airline, as it practically has minimal assets and liabilities far outweigh assets, he said such a situation cannot be ascertained at this stage. "How can I foresee what will happen in the NCLT This is the first case of the aviation sector that will be tested," he asked.

Jet Airways, which was grounded on 17 April, owes more than Rs 8,500 crore to a consortium of banks led by State Bank, which now run the airline, while it has a much larger debt pile by way of accumulated losses to the tune of Rs 13,000 crore and vendor dues of over Rs 10,000 crore and salary dues of over Rs 3,000 crore.

Talking about the Reserve Bank's revised framework for resolution of stressed assets, issued on 7 June, Kumar said all the accounts that were referred to NCLT under 12 February guidelines of RBI will need to be re-looked.

"All those accounts will be reviewed. All banks are reviewing those accounts that need to be covered under the 7 June resolution framework," Kumar said. On the expectation from the Budget, he said the Budget should give stimulus to private sector investment. "I am expecting the budget to give more allocation for the infra sector and address the needs of the farm sector," he said.

Updated Date: Jun 21, 2019 08:11:32 IST