Shares of several Indian banks including the Central Bank of India, Bank of Baroda, IDBI Bank, and Axis Bank were down in the red on Wednesday. What do all these banks have in common? They all have exposure in Go First Airlines, which filed for bankruptcy on Tuesday.
What Happened: Budget Airline Go First filed for bankruptcy on Tuesday. The company had earlier in the day canceled several of its flights before filing a voluntary insolvency resolution with the National Company Law Tribunal.
The Wadia Group-owned company in the filing said that it has to resolve this due to “the ever-increasing number of failing engines supplied by Pratt & Whitney's International Aero Engines which has resulted in Go First having to ground 25 aircraft.”
Now, as the financial troubles of the loss-making airline have evidently many fear that creditors of the company will face difficulty in recovering their loans. As per reports, the Central Bank of India has the largest exposure in the company at around ₹1,500 crore. The next is the Bank of Baroda at around ₹1,400 crore. Axis Bank has an exposure of Rs 30 crore and IDBI Bank’s exposure is of Rs 58.58 crore.
Price Action: Here is how shares of the banks fared in the early hours of trading on Wednesday.
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Central Bank of India’s share price was down 3.48% to trade at ₹29.15.
BoB share price was down 2.71% to trade at ₹183.
Axis Bank’s share price was down 0.63% at ₹865.20.
IDBI Bank shares were down 0.91% to trade at ₹54.31.
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