Jet Airways' has delayed the payment of interest and principal instalment to the banks, following which SBI along with other banks and stakeholders has been working on a comprehensive resolution plan towards a turnaround of the company for sustained growth and restoration of financial health.
Etihad currently owns 24 per cent of Jet Airways and has the leeway to increase its stake up to 49 per cent. However, the Abu Dhabi-based airline is keen on gaining greater control if it is to infuse more funds in the ailing airline.
In the first half of FY19, the industry has seen a growth of 13 per cent. The industry did go through very tough times from 2010-2016, growing at less than 5 per cent. Looking at 2017-18, the growth rate was 9 per cent.
Post transformation, the management is expecting a total business of Rs. 2.45 lakh crore with a targeted profit of Rs. 2,000 crore, net interest margin ranging between 3.5-4 per cent, return on assets of 1.3 per cent, return on equity of 16 per cent and credit cost below 1 per cent at the end of FY 2022.
The bank provisioned Rs. 384.95 crore for its exposure to infrastructure development and finance sector, which was classified as a non-performing asset during the quarter.
The bank had recorded a net profit of Rs. 300.04 crore in the October-December quarter of last fiscal. Total income of the bank increased to Rs. 1,883.65 crore during the Q3FY19 as against Rs. 1,336.42 crore over the corresponding period of the previous fiscal.
Over the past two years, the Essar Group has repaid over Rs. 1,37,000 crore of debt (including that of Essar Steel), a majority of which is to the Indian banks and constitutes more than 80 per cent of its group debt, said a company statement.
The circular resolution would be considered by the board of directors on or after January 2, 2019, the proposal for raising capital by this infusion and further issue of equity shares at an appropriate time and other incidental matters, it said.
Bank of India is likely to get the highest amount of Rs 10,086 crore, out of these seven PSBs, followed by Oriental Bank of Commerce, which might get Rs 5,500 crore through recapitalisation bonds, sources added.
Central Government, in a letter dated December 26, 2018, has informed of its decision to invest Rs. 2,159 crore in the equity capital of the bank by preferential allotment. The lender is one of the 11 public sector banks that are under the prompt corrective action (PCA) framework of the Reserve Bank of India following deterioration in its financial health.