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Oriental Bank of Commerce starts steps to recover dues from KFA

28 Jan 2013 Evaluate

Oriental Bank of Commerce (OBC) has started the process to recover the Rs 55 crore fund exposures it had to the grounded Kingfisher Airlines (KFA) by appealing to the Airbus Industries, a guarantee provided by the aircraft manufacturer. In the December quarter, KFA account turned into non-performing asset (NPA) for the bank. 

The bank had separately extended pre-delivery payment (PDP) financing for the aircraft acquisition, unlike most public sector banks which, through consortium, provided working capital finance for this private airline. It had, through PDP financing, funded the initial advance for certain aircraft ordered by KFA.

The lender had not obtained any specific collateral directly from the airline but the funding was extended on the back of a guarantee furnished by the airline manufacturer.

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