9-Aug-2011 10:22 AM

Air India's payment defaults to affect Indian lenders

Air India defaulting on any payments will negatively affect the rating of Indian lenders, according to Moody’s Investor Services (Economic Times/The Hindu Business Line, 09-Aug-2011). Lenders including Bank of Baroda, SBI, Punjab National Bank, IDBI Bank, Central Bank of India, Bank of India and Oriental Bank of India, make up 70% of Air India’s borrowings. “Recurring defaults by the airline imply that government support may not be timely, which is credit negative for Indian banks,” Moody’s stated. Air India recently received a INR12 billion (USD267 million) boost from the Indian government, but this has been deemed as “delayed and inadequate”.