Trouble for the Indian carrier Kingfisher Airlines doesn’t seem to stop. Lenders of Kingfisher has decided to start the process of recovering Rs 7,500 crore (USD 1.5 Billion) outstanding loans from the airline. The decision was taken at a Tuesday meeting attended by the consortium of lenders and Kingfisher management, including CEO, Sanjay Agarwal, and UB Group president and CFO, Ravi Nedungadi.

The decision comes even as Kingfisher Chairman Vijay Mallya has promised to airline employees about clearing their salaries for 11 months and has assured of restarting operations with the forthcoming summer schedule.

Etihad Airways is reportedly in talks with Jet Airways and Kingfisher after the government approved foreign direct investment in Indian carriers. From the recent developments, it looks like Etihad might strike the deal with Jet Airways. One of Kingfisher’s strong backing would have been a successful Etihad deal.

Kingfisher Airlines today traded lower at Rs. 10.58 on the BSE as of 4:00 pm. The stock had gained 10% over the last two days after dropping as much as 26% in the last month.

Shymal Acharya, Deputy managing director of State Bank of India said,

“They have not been able to come up with a plan. The consortium thought we cannot give them more time and we have decided to recall the loan. The recommendation will go to the Board. Each bank will go to their respective boards and a notice will be served to Kingfisher Airlines following which there will be a legal recourse. We have the personal guarantee of Dr Mallya and when we take the legal recourse even that will be revoked.”

State Bank of India has the maximum exposure of Rs. 1,600 crore, followed by Punjab National Bank (Rs. 800 crore), IDBI Bank (Rs. 800 crore), Bank of India (Rs. 650 crore) and Bank of Baroda (Rs. 550 crore).

Since 2006, Kingfisher’s max share price was Rs 355 and lowest was Rs 7.4. Kingfisher’s all-time share price chart is below:

Kingfisher Airlines was once considered as a premium airline to fly in India.

In September 2012, the carrier had the least market share of 3.5%. Kingfisher has been grounded since October 1 2012 after a labour unrest due to non-payment of salaries which have not been paid since last May.

The carrier has never made a profit since it began flying in 2005.

With this being the case, Captain Gopinath (Founder of India’s first LCC Air Deccan in 2003) has received No Objection Certificate (NOC) from the Indian government for launching a new low cost carrier. Post Air Deccan’s acquisition by Kingfisher, Gopinath had a non-compete agreement with Kingfisher till end of Jan, 2013.

It is reported that Gopinath might launch the new LCC this year.