Amid the on-going Go First crisis, Bank of Baroda has reportedly set aside Rs 500 crore as provisions against Go Airlines’ loans. As per a report, through these provisions, Bank of Baroda would cover any potential hit in case Go First’s loans turn bad.
According to a report in Livemint.com, Sanjiv Chadha, chief executive, Bank of Baroda said that Go First airlines has indicated that the bank’s exposure is about Rs 1,300 crore. However, this is without accounting for the exposure guaranteed by the government.
He reportedly added that any potential downside to the whole Go First issue has been fully taken into account. Hence, Bank of Baroda is completely protected as far as the particular account is concerned.
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“Of this, about a Rs 1,000 crore is collateralized by way of tangible security and by way of corporate guarantees. We have in this quarter gone ahead and made a provision of Rs 500 crore for this account,” the publication quoted Bank of Baroda CEO, as saying.
It adds, “We have always been proactive in taking any provisioning which is required and that is why our credit costs have come down. Normally, we do not comment on specific accounts, but in this case, we will make an exception because the company has made a filing and the figures are public knowledge.”
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Go First insolvency case has caused havoc in the Indian aviation sector. Recently, the National Company Law Tribunal (NCLT) admitted Go First’s insolvency plea after the airline approached NCLT Delhi for voluntary insolvency proceedings.
