The quantum of recoveries will mean that lenders managed to recoup more of their dues from Kingfisher as compared to other large stressed accounts of similar vintage.
Through the Insolvency & Bankruptcy Code, banks have managed to recover nearly 80% of their dues in Essar Steel Ltd, 63% in Bhushan Steel Ltd, 41% in Bhushan Power & Steel Ltd and around 40% in Ruchi Soya Industries Ltd.
Pratip Chaudhuri, former chairman at SBI, who headed the bank at the time Kingfisher Airlines defaulted, said the value recovery, despite the time lapse is a good sign for banks who are often deemed “reckless”.
“It shows that bankers were not reckless in taking securities and lending money. But we also have to remember that the group companies were taken over by a foreign buyer (Diageo) and since then the value of these pledged securities have gone up,” Chaudhuri said. “Typically as time passes, the value of the security goes down.”
Some of the other large lenders to Kingfisher Airlines include Punjab National Bank, IDBI Bank and Bank of Baroda.