The country's largest lender State Bank of India has written off and transferred the loan account of Kingfisher Airlines along with more than 60 other accounts, mostly of willful defaulters, as part of it efforts to clean up its balance sheet from toxic assets.
As per a report in NDTV website, the Rs 1,200 crore loan advanced to the erstwhile Vijay Mallya-owned airlines had been transferred to a category called Advance Under Collection Accounts (AUCA). This will enable the bank to take out the loan from its balance sheet, but will have the option of recovering the amount from its promoter.
Kingfisher Airlines owes more than Rs 6,900 crore to 17 banks out of which SBI's loan amount stands at Rs 1,200 crore. This amount has now increased to around Rs 9,000 crore with accumulated interest and other charges.
Past efforts of banks to recover the loan amount through selling off the assets of Kingfisher Airlines and it erstwhile promoters have not met with much success.
Recently, an e-auction of Mallya's Kingfisher Villa in Goa failed to get any bidder. In August this year, banks' effort to sell the the Kingfisher House in Mumbai's Ville Parle for auction had also met a similar fate. Even, Kingfisher trademarks at a reserve price of Rs 330 crore didn't generate any interest from buyers. As on June 30, 2016, SBI has written off Rs 48,000 crore worth bad loans.
Share price of SBI closed at Rs 277.20, down 0.36 per cent on Wednesday than the previous close.