Air India has borrowed $120 million from Japan’s SMBC intending to buy the Airbus plane A350-900. This aircraft is a wide-body aeroplane. This loan is given by the SMBC branch which is located in Singapore.
Indian company Tata Group owns the aviation company. SMBC is a banking financial service organization in Japan that has given this loan to it.
What is SMBC?
SMBC or Sumitomo Mitsui Banking Corporation is a lender in Japan that has approved the loan to Tata Group’s company. The bank deals in the business of financial products as well as services. It works with people and businesses. It provides financial services to small, medium, and large-sized businesses. It also offers its services to public sector companies and businesses. SMBC was formed in 2001 after the merger of the Sakura Bank.
Loan Will Finance the Airplane Partially
According to an official statement, this loan money will help partially finance the buying of A350-900 aeroplanes that Air India had earlier purchased from Airbus in October 2023. According to the information, Airbus’s A350-900 aeroplane is worth more than 300 million dollars.
SMBC has said that this is a secured debt loan. The lender has a very old and long-standing relationship with the Tata Group which has led to this deal. This is the first time that SMBC Bank has loaned money for buying an aircraft.
The loan of 120 mn USD comes under Tata’s plan in which it has decided to buy 470 airplanes from Boeing and Airbus. Tata has also given equity for this plan.
SMBC India Head and Air India Official’s Statement
SMBC bank’s India head Hiroyuki Mesaki has said that they were happy to work with the Tata group and further strengthen their relationship.
The Tata group’s aviation company Commercial and Transformation Officer Nipun Aggarwal has said that the aircraft for which the loan has been given was the first delivery airplane which took place in October this year.
Nipun Aggarwal said that this loan deal is a major step to further expand his aircraft financing business via GIFT City. The latter is the first IFSC or International Financial Services Centre started by India.
SMBC has said in an official statement that India is the fifth largest aviation market in the world and more opportunities can be expected in this sector. There is a lot of scope in this sector as the upper and middle class want to travel more.
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