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The debt-laden Kingfisher Airlines, which owes 17 banks about Rs 7,000 crore, does not pose any systemic risk, RBI Deputy Governor K C Chakrabarty said today.
When asked about the troubles at Kingfisher Airlines, Chakrabarty said that "it does not pose any systemic risk to the banking system".
He was talking to reporters on the sidelines on an SME event organised by the Bombay Chamber of Commerce and Industry here.
The aviation regulator DGCA had recently served a show-cause notice to the company asking why its licence should not be revoked.
Within the lenders consortium, SBI has the single largest exposure with Rs 1,580 crore, followed by IDBI Bank (Rs 720 crore), Punjab National Bank (Rs 435 crore), Bank of India (Rs 575 crore), Bank of Baroda (Rs 530 crore), Central Bank of India (Rs 420 crore), UBI (Rs 350 crore), Corporation Bank (Rs 150 crore), and Federal Bank (Rs 80 crore which is not a loan but an en-cashed bank guarantee to BPCL).
I do not understand what the RBI Deputy Governor is speaking about. The default by a single borrower like Kingfisher has the potential to erode the entire networth of Central Bank of India, the sickest Bank in the Public Sector Bank. During his tenure as Chairman of PNB has he lent money to Kingfisher is something that the CVC has to investigate. From his comment it appears that the imprudent decision was taken after he left PNB
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