New Delhi: India's central bank, the Reserve Bank of India (RBI), has approved state-owned Air India Ltd's financial restructuring plan and has asked a group of creditors, led by State Bank of India (SBI), to take the process forward. The bank was asked to vet the restructuring plan by an empowered Group of Ministers (GoM) which has been tasked to look into ways and means of reviving a financially bankrupt, overstaffed debt –burdened airline.
According to government sources, RBI has asked AI's lenders to meet on Monday to discuss the plan. RBI has also forwarded its approval to the finance and aviation ministries.
Officials familiar with the communiqué have said RBI has offered Air India some special provisions and concessions within the regulatory framework.
Sources also said the restructuring process will take about four months to implement, and will require firm government commitment to infuse fresh equity into the airline.
The banks will also ease the terms of working capital and aircraft purchase loans given to Air India.
By some accounts the airline has short-term debt of Rs27,000 crore in addition to loans of Rs42,000 crore for purchase of aircraft.
Government approval for the restructuring plan is expected only after lenders have approved the financial plan.
Earlier, the RBI cleared a financial restructuring plan for rival private carrier Kingfisher, as a result of which banks now own 23% of the carrier.