Air India is expecting to get sovereign guarantees for Rs 2,500 crore loans from the government next week. The State-run airline has tied up with 8-9 banks to raise the debt, to cover the shortfall in government funding to shore up its finances, sources in the airline firm said.
Sovereign guarantees work as assurance for the lenders that in case the beneficiary of the loan defaults, the government will repay the money.
According to the latest budget document, the government had set aside Rs 5,000 crore as equity investment to Air India for the current financial year.