This sounds a little extraordinary, that the varied lenders to Jet Airways will need to swallow a 75% haircut on the loans they made to the company. It’s not on a trivial sum either, Rs 14,000 crore is mentioned as a total sum. The problem here being that there aren’t really all that many assets to back that up. This then telling us something about Indian banking, that politically favoured companies can indeed borrow in a manner that might not be all that economically wise.…See More
India’s Jet Airways has been in trouble for months now. They’ve been losing money and banks won’t lend any more – sensibly enough, it’s a money pit. All of which is a useful lesson in why we need capital and capitalists. There’s got to be someone there able and willing to cover losses in the bad times – that’s what they get the profits for in the good.
This is the part of the system that some find so terribly hard to understand.…See More