According to latest reports, State Bank of India is planning to enter the aircraft leasing business in India.
Due to the current circumstance, banks are not keen to finance airlines though the sector is expected to bounce back.
Banks, including SBI, have been financing aircraft purchase by airlines.
Till recently, rules did not allow them to finance leasing.
This changed with the International Financial Services Centre Authority, the regulator for GIFT City, releasing draft regulations permitting the same.
Earlier, the government had announced incentives for aircraft leasing companies to open offices in the Gujarat International Finance Tec-City.
It is an international financial services centre, near Ahmedabad.
The Union budget rolled out incentives and tax holidays on capital gains for such companies opening at GIFT City. This is to attract aircraft lessors to set up shop in India.
Moreover, SBI is looking for a foreign partner for the proposed venture.
The leading public sector bank’s venture into the business is on the lines of Bank of China.
Previously, Bank of China had entered the market as part of a plan that the Chinese government proposed.
The purpose was to develop China as a leasing hub for aircraft.
However, Bank of China went on to become one of the largest aircraft leasing companies in the world.
It is also the third largest in India in terms of the number of aircraft leased.
In fact, the company has leased more than 25 aircraft to various airlines in India.
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