RBI approved Restructuring of Air India's Working Capital Loan Liability of Rs 22000 crore

Reserve Bank of India (RBI) cleared Air India’s loan restructuring proposal thereby extending AI’s loan tenures from 10 to 15 years. RBI approved the restructuring of the airline's working capital loan liability of Rs 22000 crore.
The latest proposal is part of the report prepared by a Group of Officers led by Finance Ministry’s special secretary Vilasini Ramachandran. The Group of Officers’ report had recommended a multi-pronged approach to turnaround Air India. It had suggested a mix of cash infusion, writing off part of Rs 44000 crore aircraft purchase loans and cutting down the remaining aircraft order.

Proposal

The Rs 18000 crore Corporate Debt Restructuring (CDR) proposal offered restructuring of Rs 11,000 crore into long-term loans with a repayment guarantee by the government. The tenure will be increased by another five years to 15 years. Apart from this, Rs 7000 crore loan will be converted into cumulative redeemable preference shares and Rs 3,500 crore is likely be converted into cash credit.

The debt trapped national carrier has accumulated debt of over Rs64,000 crore from 14 lenders which, under the aegis of SBI Caps, had submitted a restructuring proposal to RBI seeking its permission to extend the loan tenures.

Consequence

RBI’s decision expected to ease the debt servicing burden of the troubled airline, was taken at a meeting that was attended by officials of the RBI, Air India and SBI Caps. SBI Caps submitted the debt restructuring proposal.
Under the Rs 18000 crore Corporate Debt Restructuring proposal, the lenders to Air India would extend the tenure of Rs11000 crore short-term loans into long term loans of 15 years and convert Rs7000 crore debt into equity