City Union Bank marks SpiceJet SMA-1, recollects Rs 100-crore overdraft
1 min readTamil Nadu-based City Union Bank has marked the account of low-cost provider SpiceJet as particular point out account-1 (SMA-1), whereas deciding to withdraw the Rs 100 crore financial institution overdraft facility prolonged to the airline.
Lenders declare an account SMA-1 when curiosity or principals on loans are overdue for between 31 and 60 days.
A SpiceJet spokesperson mentioned, “The Rs 100 crore facility is fully secured and backed by a Rs 100 crore fixed deposit. There has never been a default in service of this facility.”
The transfer by City Union Bank strikes follows SpiceJet’s ongoing courtroom case over a possible liquidation for non-payment of dues to Credit Suisse, and on account that the fastened deposit backing the Rs 100 crore facility was provisionally connected by the Enforcement Directorate in 2015.
In January, the Supreme Court stayed the publication of a Madras High Court order that directed winding up of the airline and gave it time to clear the dues.
In an earnings name on February 4, City Union Bank MD & CEO N Kamakodi had mentioned: “Our bank has a cash credit exposure of Rs 100 crores over SpiceJet Airlines, which was sanctioned in the financial year FY2014-15 based on the long standing customer relationship with then promoter Sun TV Group, which was collaterally secured by a fixed deposit in the name of the promoter. In March 2015, the Enforcement Directorate provisionally attached the fixed deposits. The trial court ruled against the Enforcement Directorate attachment, but the ED preferred to appeal in the High Court”.