SBI is looking for options to venture into the aircraft leasing business after the government. As the Union budget for 2021-22 has incentives for aircraft leasing companies to open offices in the Gujarat International Finance Tec-City (Gift City), an international financial services centre, near Ahmedabad.

Ashwini Tewari, managing director – international banking, technology and subsidiaries, SBI says, “We are evaluating options to handle aircraft leasing business in Gift City subject to regulatory approvals and viability.”

As the state-owned lender does not have any expertise in running an aircraft leasing business, it is looking for a foreign partner for the proposed venture, the publication mentioned citing people familiar with the development.

“SBI does not have the expertise of running an aircraft leasing business and the bank is looking for a foreign partner that has the expertise in the sector,” states an anonymous person.

The leading public sector bank’s venture into the business is on the lines of Bank of China, that entered the market as a part of a plan by the Chinese government to develop China as a leasing hub for aircraft.

Ajay Singh, the SpiceJet promoter is keen to start leasing seaplanes through an Indian company in Gift City and is also planning to transform as a partner in a leasing company in personal capacity, people familiar with the matter revealed.

While Indian airline companies are open to leasing from companies based out of India, they have apprehensions on the implementation of these announcements.

“Implementation of this scheme will be key,” says an industry official “But if a bank like SBI gets into the market, it will be a big plus for aircraft leasing in India.”

The Narendra Modi government, since its initial term, had been working to develop leasing companies in Gift City and has also discussed this with China model of aircraft purchases to nudge leasing companies to come to India.

However, in the China model, the state orders aircraft on behalf of every airline and fetches investment deals from the organization selling the aircraft and also leasing companies. This idea has been redundant by Indian airlines.