Struggling national carrier Air India's lenders met in Mumbai today and have put forth a proposal to consider the Rs 18,000 crore debt as statutory liquidity ratio bonds, CNBC-TV18's Gopika Gopakumar reports.
Bankers including SBI chairman Pratip Chaudhuri joined in the discussion from Delhi and what we understand is that lenders have put in a proposal to seek SLR status for Air India's bonds. What is being suggested is converting Rs Air India's 18,000 crore debt into bonds which will then be guaranteed by the government now.
If these bonds get the SLR status, then this will be a huge benefit for both banks as well as Air India because banks will not have to keep any provisions against SLR. Besides that, SLR bonds are government guaranteed and this will be of great demand amongst various banks. In fact, it will be traded and there will be a great appetite for these bonds. The final call on this proposal will have to be taken by this weekend after which the proposal will be submitted to the RBI and the government.
Remember, getting SLR status for Air India bonds is going to be a tough task. In the past, both the power sector and the oil ministry had asked for SLR status for the bonds, but the RBI had refused. So it is going to be a tough call whether the RBI is going to turn around and allow this time.
Even the Finance Ministry is going to agree to this proposal because the government bonds will be in competition with Air India bonds, which will be the main problem. So will the Finance Ministry agree to the proposal of giving SLR status to Air India is another question that we have to look.
Besides that, there is a big deadline of March looming ahead. The lenders will have to take a final call before March 21 otherwise the RBIs exemption will be over and the national carrier's debt will become non performing assets.
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