Naresh Goyal will no longer be the chairman of the company, Jet Airways said. The airline also announced that the lenders would have two nominee on the board.

The report of Naresh Goyal's departure led to a rally in Jet's shares amid heavy volumes. The Jet Airways stock closed 13 per cent higher, outperforming the broader market which settled around 0.9 per cent lower amid global growth concerns.

The lenders, led by State Bank of India (SBI), will convert their debt into equity and take a controlling stake in the airline for a token sum of 1 rupee, Jet Airways said. Jet said the banks will initiate a bidding process to sell their stake in the airline to a new investor and that the process is expected to be complete by the end of June.

Finance Minister Arun Jaitley said he was happy with the lenders' decision. “Banks have kept self interest in mind by trying to keep it as a going entity so that they can recover their dues,” he said.

In its regulatory filing post-market hours on Monday, Jet Airways said it had constituted an Interim Management Committee to manage and monitor its daily operations and cash flow.

Kevin Knight, nominee of Etihad Airways PJSC, also resigned as director from the airline's board, Jet Airways said.

The exits come days after reports that the government has asked state-run banks to bail out Jet Airways for the moment to prevent the airline going bankrupt.

Saddled with more than $1 billion of debt, Jet has struggled to stay afloat. Several lessors have started terminating leases with the carrier.

Jet Airways has a fleet of 119 aircraft. Of these, 54 aircraft have been grounded due to non-payment of dues, sources told NDTV. Jet Airways is not flying another 24 planes because of non-maintenance, they added. This means that around two-thirds of the fleet of what was India's top private airline is grounded for various reasons.