City Union Bank (CUB) said that the no-frills airline SpiceJet has agreed to settle its dues with the bank in a phased manner that will see re-payments happening till June next year. SpiceJet has been servicing the interest dues regularly and interest had been paid up to July 2022.
Read More:-PF News: How Much Money Do You Have in Your EPF Account? 4 Ways You Can Check it
The airline immediately paid Rs 3 crore dues in July 2022 and pledged two crore share with us as collateral owned by the promoter of SpiceJet. The market value is more than almost around Rs 90 crore plus currently,” N Kamakodi, MD and CEO, City Union Bank, told analysts during an earnings call.
Read More:- Haven’t Received Income Tax Refund Yet? Step-by-Step Process to Track ITR Refund Status Online
SpiceJet had requested the bank to renew their existing facility and terms and conditions for such renewal were mutually agreed upon. Apart from the payment in July and the pledging of the shares, the company, as part of the pact, has agreed to pay additional Rs 12 crore before the end of August 2022 and agreed to settle the balance dues in a phased manner before June 2023.
Read More:-Induslnd bank hikes interest rates on fixed deposits below 2 crore; check out all new rates
He said the SpiceJet account has been renewed on August 8, 2022, with a limit of Rs 97 crore since the renewal plan was agreed upon and the account is now moved out of the SMA status. “Till third quarter of FY’22, we have made a provision of Rs 85 crore and further we have made a contingency provision of Rs 12 crore in first quarter of FY’23. So, we have made a contingency provision of Rs 97 crore against the total outstanding of Rs 97 crore,” he said.
Read More:- RBI Announces Dates For Second Series Of Sovereign Gold Bond Scheme: All You Need To Know
The bank has an exposure of Rs 100 crore to SpiceJet, which was sanctioned in FY’15. It had in March this year marked the account as special mention account-1 (SMA-1. The marking to SMA account was done during SpiceJet’s courtroom case over a possible liquidation for non-payment of dues to Credit Suisse, and on account that the deposit backing the Rs 100 crore facility was provisionally connected by the Enforcement Directorate in 2015. In March 2015, the Enforcement Directorate provisionally attached the fixed deposits. The trial court ruled against the Enforcement Directorate attachment, but the ED preferred to appeal in the high court.
Read More:- 5 Credit Cards that can Make Shopping More Rewarding this Independence Day
Meanwhile, on the growth outlook of the bank, Kamakodi said it was pushing the growth pedal to achieve mid-to-double digit credit growth of 15-18% against 12-15% announced earlier as it was expected to do well on all factors such as credit growth and asset quality.The capital adequacy of the bank stood at 20.48% for the June quarter compared to 19.58% for the corresponding period last year.
