Npa sbiThe self-proclaimed 'king of good times' , Vijay Mallya , received a shocker on Thursday when theState Bank of India (SBI) called his cash-strapped Kingfisher Airlines a "non-performing asset".

"Kingfisher is a NPA (non-performing asset) for us. They are in default," SBI chairman Pratip Chaudhuri told reporters in New Delhi. SBI, the Mallya-led airline's largest creditor and the leader of the consortium of banks that has lent funds to it, has an exposure of Rs 1,457.78 crore to the struggling carrier. If that was not enough, the bank has asked Kingfisher to repay the dues of Rs 500 crore to it within 90 days. "It has 90 days to repay loans to upgrade to standard assets," Chaudhuri said.

SBI's exposure is the highest among any of the lenders to the airline, followed by IDBI Bank (Rs 727.63 crore), Punjab National Bank (Rs 710.33 crore), Bank of India (Rs 575.27 crore) and Bank of Baroda (Rs 537.51 crore).

To compound Mallya's woes, the directorate general of civil aviation (DGCA) on Thursday pulledup the airline for cutting corners at the cost of passenger safety and set a Monday deadline for plugging the loopholes.

The double whammy has come at a time when the airline is facing severe financial crunch. The private carrier is in a financial mess and struggling to service its loans, which have run up to over Rs 6,000 crore. Kingfisher reported a net loss of Rs 469 crore for the July-September quarter of the current fiscal, though its revenues rose by 10.2 per cent to Rs 1,528 crore.

In the last fiscal that ended March 31, 2011, it posted a loss of more than Rs 1,000 crore. DGCA chief E.K. Bharat Bhushan grilled Kingfisher Airlines CEO Sanjay Aggarwal on lapses in flight operations, quality assurance monitoring, backlog of flight crew training, shortage of operational crew and delay in disbursement of salaries to pilots, cabin crew and ground handling staff.

The meeting was part of the civil aviation regulator's review exercise, triggered by concern over reports that Kingfisher and other bleeding domestic carriers could be compromising on passenger safety to save costs.

"There were apprehensions about Kingfisher Airlines having a number of aircraft on ground because of the unavailability of engines and spares because of which they were operating a truncated schedule," the director general of civil aviation said. He said no airline would be allowed to take a short-cut on safety issues despite the financial difficulties being faced by them. At the same time, he assured that there was no threat of any airline being grounded.

"There is no threat of any airline shutting down or their licences being cancelled. We have been in touch with all the airlines. We are ensuring that safety norms are ensured," Bhushan told journalists after the meeting.

Mallya promoted Kingfisher Airlines as a five-star airline, but landed in a financial mess. After bank loan defaults, tax authorities have been breathing down its neck for failing to pass on income tax collected from employees and service tax from passengers.

The oil companies have also been complaining about unpaid bills and have on occasions grounded flights to recover their money. The airline has been working out deals with its lenders to lower its interest burden. But the banks have told it to clear the dues first, such as service tax and provident fund deposits of its employees, before they would consider releasing additional funds.

Billionaire Mallya has sought infusion of funds through banks at low interest rates, besides other concessions on a par with what Air India was getting. He has also been lobbying desperately with the government to allow foreign airlines to pick up stakes in Indian carriers - that is FDI in the airline sector. But a decision has yet to be taken on that.

Late last year, Kingfisher announced rationalisation initiatives, including phasing out of its low-cost Kingfisher Red service and reconfiguration of its fleet.

New Delhi, Jan 17 (PTI) State Bank of India today said it will be difficult for lenders to provide more funds to debt- ridden Kingfisher Airlines unless the airline pays Rs 100 crore to restore a bank guarantee invoked after the carrier failed to repay its loans or makes good the default. "It (Kingfisher Airlines) is right now an NPA (non-performing asset). In Q3, it was sub-standard. Until such time the default is cleared, banks are finding it difficult to lend more. If Kingfisher becomes an NPA, we don't have a choice. Neither does the company," SBI Chairman Pratip Chaudhuri told reporters here. SBI, the leader of the consortium of banks that has lent funds to Kingfisher Airlines, has loan exposure of Rs 1,457.78 crore to the struggling firm. SBI's exposure is the highest among any of the lenders to the airline, followed by IDBI Bank (Rs 727.63 crore), Punjab National Bank (Rs 710.33 crore), Bank of India (Rs 575.27 crore) and Bank of Baroda (Rs 537.51 crore). The private carrier is in a financial mess and struggling to service its loans, which have run up to over Rs 6,000 crore. Chaudhuri further said the Vijay Mallya-led airline had time till to December 20 to make good its loan repayment defaults or restore the guarantees, but has done neither and so it continues to be classified as an NPA. "There are some guarantees, they got invoked on September 20. The company had time till December 20 to either pay the guarantees or restore them. They have done neither, so it continues to be an NPA. The default is about Rs 100 crore, if they secure the default, if they pay up the cash then it will become a standard loan. If the account becomes a sub-standard NPA, then it becomes difficult for banks," he said. MORE PTI RSN RMI ARV( Enjoy Moneycontrol.com on iPad and be prepared for a fantastic experience. Get real time stock quotes, interactive charts, market buzz, and watch CNBC-TV18, CNBC Awaaz live on your iPad. Check out the free moneycontrol app.