Central Bank of India Reclassifies Go First Loans as Non-performing Assets

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Previously, the Central Bank had made provisions for Go First’s account due to anticipated future stress. The reclassification as an NPA has led to a write-back and a full provision on the account. As a result, the bank paid tax on over Rs 600 crore provision in Q1 FY24, leading to a Rs 43 crore write-back post-NPA reclassification.

Despite the challenges, the bank remains optimistic about recovery from this sufficiently collateralized account, which is set to enhance its bottom line. The National Credit Guarantee Trustee Company, which administers the Emergency Credit Line Guarantee Scheme, will provide relief to pandemic-hit companies like Go First.

According to the Insolvency and Bankruptcy Code of 2016, the lender will file claims. Jindal Power and Jettwings Airways have shown interest in Go First. However, securing funding remains challenging due to legal cases filed by aircraft’s lessors.

Bank of Baroda also has significant exposure to Go First’s financial situation. The resolution professional at Go First continues efforts to secure funding despite these hurdles.

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