Indian Bank has made a provision of Rs 32 crore against its Rs 800-crore loan to Air India

BL ;Chennnai:26th july 2012

Indian Bank has made a provision of Rs 32 crore against its Rs 800-crore loan to Air India, the bank’s Chairman and Managing Director, Mr T. M. Bhasin, said at a press conference here today.

He said the bank was required to make Rs 8 crore of provision for each of the four quarters of the year, but it decided to take the entire provision in the first quarter itself.

Except for Air India, the bank has no other exposure to the aviation sector.

Indian Bank has restructured loans worth Rs 9,918 crore (loans for which payment terms have been reset to help the borrower.)

Two loan accounts are chunky, incidentally, both are public sector — Air India, and the one to the Rajasthan State Electricity Board (about Rs 1,200 crore).

Indeed, most banks have exposure to RSEB, but it is generally believed that the loans would be paid back as they are backed by a Government guarantee.