Bank of Baroda makes ₹500 cr provisioning towards its exposure to Go First Airlines

Bank of Baroda has proactively provided Rs 500 crore towards its exposure of about Rs 1,300 crore to cash-strapped Go First Airlines, whose voluntary insolvency plea was recently accepted by the National Corporations Law Tribunal.

“We are proactive in making any savings that are required,” said BoB MD and CEO Sanjeev Chadha.

BOB’s exposure is about Rs 1,300 crore. This does not include government-guaranteed exposure.

“Out of this exposure (approximately Rs. 1,300 crore), about Rs. 1,000 crore is secured by tangible guarantee and by corporate guarantees. This quarter we went ahead and made provisions of Rs. 500 crore. We have been Any potential downside is fully taken into account and we are fully protected in connection with this account.”

The RBI has also made a 15 per cent provision towards its exposure to the airline.

The bank said its outstanding exposure to Go First Airlines as on 31st March 2023 is Rs.1,305 crore. Further, the government guarantees an additional Rs 682 crore sanctionable amount under the emergency credit line.

A senior BoB executive said the current market value of properties pledged by Wadia Realty is over Rs 1,200 crore. “Our total exposure is up to Rs 1,300 crore. Of this, we are covered over 90 percent because the land pledged by Wadias is a huge 95 acre prime land in Mumbai. So, most of our exposure is secured.”

When asked if the government asked the banks to bail out the airline, the person said: “No, nothing at the moment. We also need to clarify the business plan before injecting new money.”

Besides, according to the court documents he reviewed business lineBank of Baroda also has a pledge of 30 percent of the company’s ownership in Go Airlines.