A consortium of 26 lenders to Air India Ltd. has broadly approved a plan to restructure 180 billion rupees ($3.45 billion) debt for the loss-making carrier, an aviation ministry official said Monday, The Wall Street Journal reported. The turnaround plan includes converting some loans into equity, restructuring some at lower interest rates and elongating the repayment tenure for the rest. It was prepared by the state-run carrier in consultation with the government and its consultant SBI Capital Markets Ltd. and recently got approval from the country's central bank.

Airplane-leasing companies are preparing to repossess planes from India's Kingfisher Airlines Ltd. if the troubled carrier's finances deteriorate further, said an executive at one of the companies, Dow Jones DBR Small Cap reported. The executive said that at least two lessors have agents at Kingfisher's offices copying documents relating to their planes. These agents also are monitoring the debt-laden airline's planes to ensure that parts aren't removed in ways that violate lease terms.

India's rupee fell to a record, prompting the central bank to say it is weighing action to stem the worst performance in Asia this year, Bloomberg News reported yesterday. The rupee weakened 0.3 percent to 52.3225 per dollar in Mumbai, bringing its decline in 2011 to 14.6 percent. The BSE India Sensitive Index (SENSEX) of shares tumbled 22 percent in the period as investors sold emerging market assets on concern the U.S. and Europe will struggle to curb deficits.

The focus of media coverage of the last week has been squarely on Kingfisher Airlines (KFA), when the cancellation of a 40-odd flights on a single day, a number that eventually exceeded 80, triggering shock waves in business and consumer circles, the Business Standard reported today.

The Reserve Bank of India has warned of deep imbalances in the country’s banking system saying that capital is being allocated to a handful of elite industrialists but not to the broader, more dynamic economy. Such a constrained banking system in a large emerging market threatens to put a major drag on economic growth, according to the RBI and economists. It also poses a social threat in an economy that needs to create millions of jobs among a young population. K.C.

Lenders to Vijay Mallya-promoted Kingfisher Airlines may have no option other than restructuring the carrier's loans again. In case of a second restructuring, banks have to classify the asset as non-performing, which requires higher provisioning, the Business Standard reported. Bankers are working on a formula that would aim to keep the re-payment period and the net present value of the asset specified during the first restructuring intact, by increasing the interest rate. In this case, there would be no increase in the provisioning requirement.

A consortium of 17 banks have agreed to a restructuring package for Air India where Rs 20,000 crore of short term working capital loans will be converted into longer duration term loans and part of this money will be converted to unsecured credit that the government will repay, the Financial Chronicle reported. The repayment period of the loan has been extended by 10 years with a corporate guarantee from the Government of India and hypothecation of aircraft with the instalment beginning within two years.

Struggling Indian airline Kingfisher on Wednesday said it was in talks with bankers to reduce high interest rates on its $1.2-billion debt, but denied it was pursuing a fresh loan restructuring, Agence France-Presse reported. Ravi Nedungadi, chief financial officer of the giant drinks group UB group which controls the airline, said in a statement the carrier was attempting to swap high-cost rupee borrowings for lower-cost foreign debt. "The banks are in active consideration of these requests," Nedungadi said.

The government is working on a package to restructure loans to the tune of Rs 4,000-5 ,000 crore for the textiles sector but has ruled out a debt waiver, The Economic Times reported. Facing a slowdown, the textiles sector has been saddled with loans and has proposed a four-pronged strategy to deal with the burden, textiles secretary Rita Menon said. It wants the interest rate on the debt to be reset, besides seeking conversion of working capital into fresh debt, which will cost Rs 835 crore.

India mining giant Ashapura Minechem Ltd. filed for Chapter 15 bankruptcy protection Tuesday in U.S. Bankruptcy Court in Manhattan in a move to block foreign shipping companies that won a $125 million legal judgment against it from raiding the company's U.S. bank accounts, Dow Jones Daily Bankruptcy Review reported. The Mumbai-based company, a mineral miner and processor with debts topping $223.4 million, argued that the seizure of its U.S.-based assets would jeopardize the financial overhaul underway in its home country.