Air India has tied up with public sector lender Punjab National Bank and private lender IndusInd to secure loans to the tune of over £300 million for meeting working capital requirements. The airline expects the two banks to disburse the amount by next week, a source close to the development said. Earlier this month, the disinvestment-bound Air India had floated tenders to avail government backed INR short-term loans totalling up to £325 million in the first phase to meet its urgent working capital.
The source said, “Punjab National Bank and IndusInd bank have won the mandate to lend us loans worth £325 million. They are expected to disburse the amount next week.” They added that the funding will be used for repayment of dues to the airport operators, oil companies, and other vendors. Banks were asked to submit their financial bids by September 19, indicating the amount of government-guaranteed short-term loans they were willing to offer.
The Cabinet Committee on Economic Affairs, on June 28, had given in-principle approval for strategic disinvestment of Air India and five of its subsidiaries. As part of efforts to revive the loss-making airline, a ministerial panel under Finance Minister Arun Jaitley is currently working on the modalities for strategic disinvestment of Air India and its five subsidiaries.
