Banks may lose thousands of crores if Jalan’s bid for Jet Airways fructifies

Banks will lose thousands of crores of rupees if Murari Lal Jalan-Kalrock consortium bid for Jet Airways turns into reality. It seems Jalan-Kalrock may win Jet airways at the cost of the banks.

Considering these facts, the Jalan-Kalrock consortium has offered Rs 1,183 crore to lenders for total admitted claims of about Rs 15,525 crore. This amount will be paid over a period of five years to financial creditors and employees. In addition, the consortium has also offered 9.5 per cent stake in Jet Airways and 7.5 per cent stake in Jet Privilege. The National Company Law Tribunal (NCLT) Mumbai bench approved Jalan-Kalrock’s resolution plan on June 22.  After the approval, the resolution plan needs to be implemented in a three-month timeframe.

As of today, State Bank of India (SBI) alone has to be paid Rs 1,636 crore, Yes Bank Rs 1,084 crore, Punjab National Bank (PNB) Rs 754 crore, IDBI Bank Rs 594 crore, Canara Bank Rs 543 crore, ICICI Bank Rs 519 crore, Bank of India Rs 266 crore and Indian Overseas Bank Rs 158 crore. These are astounding numbers, as bank will have to write off a large portion of these amounts if the Jalan-Kalrock consortuim’s bid of Jet Airways turns into reality.

It may be recalled that the Directorate General of Civil Aviation (DGCA) has already made it clear that Jet Airways will not get the erstwhile slots it held when the airline was operational until two years ago. They will get slots according to guidelines for slot allocation.

Murari Lal Jalan is a businessman based in the United Arab Emirates (UAE) with business interests in the real estate sector, and no prior experience in the aviation business. As for Kalrock Capital, it’s a UK-based asset management company.