Air India Secures Rs 14,000 Crore Loan From SBI & BOB

 

Air India, the national flag carrier of India, has secured a loan of Rs 14,000 crore from the State Bank of India (SBI) and Bank of Baroda (BOB) to meet its operational requirements. The airline has been struggling with a huge debt burden and has been looking for ways to improve its financial situation.

The loan has been granted under the Emergency Credit Line Guarantee Scheme (ECLGS) of the Indian government, which was launched in May 2020 to provide financial assistance to businesses impacted by the COVID-19 pandemic. The scheme provides 100% guarantee coverage to banks on loans given to eligible borrowers, and the loans are collateral-free.

Air India had earlier sought a loan of Rs 2,400 crore from the government to meet its immediate working capital requirements. However, the government refused to provide the loan and instead asked the airline to approach banks for the same. With the approval of the loan from SBI and BOB, Air India has now been able to secure the much-needed funds to keep its operations running.

The loan will provide Air India with the much-needed liquidity to meet its operational expenses, including payment of salaries to its employees and repayment of its existing debt. The airline has been facing severe financial difficulties for several years now and had been surviving on government bailouts. The COVID-19 pandemic has further worsened the airline's financial situation, with a sharp decline in air travel demand and revenue.

The loan from SBI and BOB is a positive development for Air India and is expected to provide a much-needed boost to the airline's financial situation. However, the airline will need to focus on reducing its debt burden and improving its operational efficiency to achieve long-term financial sustainability. The government has also been considering privatizing the airline to reduce its financial burden on the exchequer.