IOB's Rs 120-cr loan to Kingfisher may turn into NPA

Tuesday, 30 October 2012 07:05 administrator
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Chennai-based public sector lender Indian Overseas Bank (IOB), which has exposure of Rs 120 crore to cash-strapped Kingfisher Airlines, said the account might become a non-performing asset (NPA) for the bank this quarter. Most lenders to the airline have already classified the account as an NPA.

A senior bank official said if the account turned into an NPA, the bank would have to provision 15-25 per cent of the amount (Rs 120 crore) this quarter. The bank’s exposure to Kingfisher is in the form of working capital finance. Currently, the lender considers the airline’s account a standard asset, though payments are due.

With exposure of Rs 1,500 crore, State Bank of India is the leader of the 17-bank consortium of lenders to Kingfisher Airlines.

As of September 30, IOB’s gross NPAs stood at Rs 5,930 crore, against Rs 3,898 crore a year earlier. Net NPAs stood at Rs 3,378 crore, compared with Rs 1,505 crore a year ago. Chairman and Managing Director M Narendra said the bank would now focus on recovery. He added in the quarter ended September, domestic fresh slippages stood at Rs 1,600 crore, while international ones stood at Rs 200 crore.

To read further, please follow the link: http://business-standard.com/india/news/iobs-rs-120-cr-loan-to-kingfisher-may-turn-into-npa/491106/