Air India to apply for 18k crore loan from SBI: Report

As per recent developments, Tata Group-operated Air India will apply for an 18,000 crore rupees loan from the State Bank of India (SBI) and Bank of Baroda (BoB) for refinancing its existing debt over the short term. The total amount would be distributed over tranches of one year and the Group is expected to borrow more money as the year progresses.

A person in the know reportedly said, “Tatas decided to continue with the existing borrowing arrangement for another year, though they will eventually make a long-term debt strategy. The loans are at a higher rate than last time, mirroring the sharp rise in the interest rates in the last one year.”

The latest loan is a progression of the debt Tata group is incurring after taking over the airline early last year, according to sources. The conglomerate will have to pay higher interest rates as RBI has increased the repo rate by 225 points since the airlines availed loans from SBI and BoB in January 2022.

Previously, Air India had borrowed 10,000 crore rupees from SBI and 5000 crore rupees from BoB at a 4.25 percent interest rate. However, the new interest rate is anticipated to be 6.5 percent.
In addition to restructuring the functioning of Air India, the Tata Group is merging its branches like Vistara and AirAsia India.

“Completion of the merger formalities is an important milestone for the group’s plans for Air India in the future because the nature and the amount of funds will be crystallised by then…Banks will hence be waiting for a pie of this top-rated corporate loan sometime later in 2023,” another insider source reportedly stated.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

Scroll to Top