Air 'Maharaja' India avails Rs 14,000 cr loan from SBI, BoB for operational expansion

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Air 'Maharaja' India avails Rs 14,000 cr loan from SBI, BoB for operational expansion
30 Mar 2023
6 min read

News Synopsis

According to a report by Mint, which cited persons with knowledge of the situation, Tata-owned Air India has collected Rs 14,000 crore from the State Bank of India (SBI) and Bank of Baroda (BoB) through a combination of refinancing of previous loans and new loans.

According to reports, Rs. 1,500 crores and Rs. 12,500 crores have been collected under the Emergency Credit Line Guarantee Scheme (ECLGS) and refinancing of existing debts, respectively.

First created to assist small companies during the Covid-19 pandemic, the ECLGS was later extended to other industries. The airline would reportedly utilize the capital to Grow Both Nationally and Globally. The airline has made plans to add additional aircraft as part of the Strategy, including a recent order for 470 aircraft from Boeing and Airbus.

Total debt for Air India was Rs 15,317 crore in FY22, a significant reduction of over Rs 45,037 crore in FY21. When Tata Group bought Air India in January of last year, it paid Rs 2,700 crore in cash and acquired Rs 15,300 crore in debt.

Banks are ready to lend money to the Tata Group. Lenders are keen to approve such applications because there aren't many huge corporations searching for Bank Loans a source with knowledge of the situation told Mint.

The loans are priced 50 basis points (bps) more than SBI's six-month marginal cost of funds-based lending rate (MCLR), based on the report's additional information. SBI's MCLR is at 8.4 percent.

Also, the airline plans to utilize the funds to pay out participants in the Voluntary Retirement Program. It will probably cost 200 crore rupees.

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