5-Jul-2011 9:58 AM

Air India to seek waiver from Reserve Bank of India

Air India is reportedly planning to approach the Reserve Bank of India (RBI) for a special waiver of its provisioning norms (Hindustan Times, 04-Jul-2011). The carrier has reportedly defaulted on payment of service tax and interest on working capital, and owes around INR480 billion (USD10.8 billion) in loans and payments to vendors. Its loans would become non-performing assets (NPAs) as per RBI provisioning norms, if the interest liability or the repayment of loan is not made by the end of Jul-2011. Air India reportedly plans to approach the RBI once the business plan prepared by SBI Caps is cleared by lenders. The airline would also approach the finance ministry for a suitable commitment on equity support as well as comfort letter which the lenders may seek.