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SBI refuses to release more funds to clear Jet staff salaries

PW Bureau

The PSU bank is believed to have told the RLC that it cannot get involved in matters that involve the airline’s management and staff

New Delhi: The lead lender in Jet Airways’ consortium of lenders, State Bank of India (SBI), has refused to release interim funds to the debt-ridden airline to pay its employees’ salaries. The PSU bank is believed to have told the Regional Labour Commissioner (RLC) that it cannot get involved in matters that involve the airline’s management and staff because it is not an equity holder.

Why does SBI not want to release interim funding?

Credit facilities, SBI said, are based on cash flows. It added that it cannot extend credit to Jet Airways because it is not generating sufficient cash flows since the airline temporarily suspended operations on April 17.

“Where there is no possibility of assured generation of future cash flows, the bank is not in a position to release any funds,” SBI said in internal communication.

The absence of a suitable bidder also an issue

The lead lender also pointed out that the bidding process had not yielded a suitable investor for Jet Airways as yet. “In the absence of a confirmed and binding bid, no assurance of release of funds can be given for the said purpose,” the bank said.

SBI has also asked the RLC to involve it any future conciliation meetings between the airline’s management and the employees.

Banks can buy a stake of up to 20 percent in the airline.

The backdrop

The news comes just days after Jet Airways employees held a protest outside the Ministry of Civil Aviation in New Delhi, asking the government to find a resolution to the crisis and pay their salaries. The airline has not paid its staff since March.