Indian financial services corporation Axis Bank has initiated the arbitration process to recover their dues following the Maldivian government’s termination of contract with Indian infrastructure giant GMR.
Axis Bank has filed an appeal before a Singapore tribunal against the Maldives government, which has scheduled its first hearing for December 2013.
Indian newspapers report that the names of the arbitrator are likely to be finalized by September and that the final hearing will take place in December.
Axis Bank lent around $160 million to GMR for the development of Ibrahim Nasir International Airport (INIA).
The sum was loaned to GMR on a sovereign guarantee provided the State, on condition that the obligation will be satisfied if GMR defaults.
The bank had demanded the Maldivian government to repay the loan soon after the government dissolved its contract with GMR last November. The government had said that they will not be responsible for the loan.
Indian papers state that the Axis Bank's loan for the INIA development project involved a debt of USD 358 million, with a projected loss of MVR 160 million for the bank if GMR defaults on the repayment.
They also state that the consortium consisting of Axis Bank and Indian Overseas Bank has provided USD 160 million to GMR for development of INIA, out of which 85 percent of loan is from Axis Bank.
Meanwhile, answering a question by the press, Axis Bank has said that as a policy, they “do not disclose names or details about its customers".