SBI to buy residential properties of Air India in south Mumbai

Country's largest lender State Bank of India has received all necessary approvals to buy residential properties of cash-starved national carrier, Air India, in south Mumbai for Rs 90 crore (Rs 900 million).

"The bank has got all the required approvals and it has conveyed its willingness to buy the properties from Air India. SBI is now waiting for the airline to complete its side of approvals," sources close to development told PTI.

The state-owned bank is planning to allocate these flats to its top executives of the rank of Deputy Managing Directors and General Managers. The airline had been looking for buyers who can purchase its four flats at up-market Peddar road in south Mumbai since last two years.

In August 2013, the national airline had floated bids for e-auctioning of these four flats. Each of these 3-BHK flats measures 2,033 sq ft in carpet area.

Confirming the communication from the bank on proposed real estate deal, an Air India official said the airline has sent the proposal to the Civil Aviation Ministry for its approval.

"The proposal is now with the Ministry for its approval," the official said. Air India has some working capital borrowings from SBI, besides long-term loans.

The funds raised from the sale proceeds would help reduce this working capital loan besides reducing the interest outgo, airline sources had earlier said.

The decision to sell these flats is part of the national carrier's plan to unlock the value in its land assets. Under the land monetisation plan, Air India plans to mop up Rs 5,000 crore (Rs 50 billion) over a 10-year period in its bid to bridge the mismatch in its revenue and expenditure.

Image: Air India headquarters at Nariman Point in Mumbai

Photograph: Rediff archives