GoAir (Mumbai International) has received an INR8 billion rupee (USD110 million) credit line from banks, designed to help it cope with the ongoing aviation crisis, finance industry sources have told the Business Standard newspaper.
According to the sources, the airline applied for debt restructuring under the Reserve Bank of India’s “one-time loan restructuring scheme” for companies under Covid-related stress. The scheme, announced in August 2020, allows banks to restructure borrowers' loans that had been regular in their repayments and no later than 30 days overdue as of March 1, 2020.
However, with this credit line, the airline will not need to restructure its loans, the sources said.
“Banks have extended credit of INR7-8 billion to the airline. This funding will be sufficient for the company for the next couple of years. It also means the airline will not need any debt restructuring,” a “senior banker” told the newspaper.
Stressed companies in India have been finding it hard to restructure their loans, as banks have taken a hardline approach. A Reserve Bank of India committee led by KV Kamath, the former head of the multilateral BRICS Development Bank, has recommended a set of parameters to banks for debt restructuring. These include strict asset-liabilities ratio limits and debt-EBITDA ratio limits for airlines.
The sources said that the loans extended to GoAir were well within the parameters of the Indian government’s Emergency Credit Line Guarantee Scheme, which was most recently extended in November 2020.
GoAir was not immediately available for comment to ch-aviation.
