Centre asks state-run banks to help Jet Airways from slipping into bankruptcy
New Delhi : The central government has asked the state-run banks to rescue Jet Airways from slipping into bankruptcy; the step comes as Prime Minister Narendra Modi seeks to avert thousands of job losses weeks before a general election, two people within the administration told Reuters.
The finance ministry has been keeping a close eye with the help of regular updates from the banks, led by State Bank of India (SBI), on Jet Airways' financial health, the people said.
"Top officials at the finance ministry seek regular updates on the issue," said an official at one of Jet's lenders, who did not want to be identified as discussions are private.
Delhi has urged state-run banks to convert debt into equity and take a stake in Jet in a rare move in India to use taxpayer money to save a struggling private-sector company from bankruptcy. The two people plus one more source, however, said this would be "transitory" and lenders could sell the stakes once Jet revives.
Saving Jet Airways becomes crucial because it is India's second largest airlines and if it gets grounded then there will be an abrupt investment climate in the nation.
It is crucial for India that Jet revives as the fall of its second-largest airline could have "disastrous consequences for the investment climate" in the sector, a top government official told Reuters.
The experts also fear that airfares may go drastically up if Jet collapses.