The country?s largest bank State Bank of India (SBI) has issued a bank guarantee of around $ 2 billion to Vodafone which aneeds to furnish it with Supreme Court to take forward its tax liability dispute with income tax (IT) department. Speaking to FE Pratip Chaudhuri, deputy managing director said the bank has syndicated the $2 billion for which Vodafone has furnished 110% of collateral.
“We have syndicated the the guarantee for Vodafone along with other banks like ICICI Bank and UCO bank. We are in a position to provide the cash in terms of forex to the company anytime they want. We have received the necessary collateral in various instruments from the company,” said Chaudhuri.
The other banks are receiving a small amount of commissions for participating in the bank guarantee.
The case relates to the Rs 50,512 crore ($11.2 billion) acquisition of Hutchison Telecom International Ltd?s stake in a Cayman Islands company, by virtue of which Vodafone entered the Indian market in 2007. SC on Nov 15 had directed Vodafone to deposit in three weeks Rs 2,500 crore as part of a tax liability in the company’s $11.2 billion takeover deal of Hutch Essar group?s India operations in 2007.
A Bench headed by Chief Justice SH Kapadia asked Vodafone to deposit Rs 2,500 crore in three weeks with the apex court registry and furnish bank guarantee of Rs 8,500 crore within eight weeks as bank security till the final disposal of the suit.