State Bank of India’s (SBI) chairman, after meeting with the government on Thursday, said that the telecom sector was important and that a combination of the measures announced by the government and that of the operators themselves would help ease the stress.
By Ankur Mishra
In a review meeting with the finance ministry, public sector banks discussed their exposure to the stressed telecom sector on Thursday. Banks are concerned about the exposure to these companies in the form of bank guarantees, which could be invoked by the Department of Telecom (DoT), in case the telcos do not pay dues as per the Supreme Court’s adjusted gross revenues (AGR) ruling. The apex court on October 24 ruled that telecom companies had to pay Rs 1.33 lakh crore to government as outstanding dues. Although the Cabinet Committee on Economic Affairs provided some relief to the stressed companies by announcing a two-year moratorium for spectrum payment on Wednesday, no relaxation has been provided in case of AGR ruling payments.
A senior banker told FE on the condition of anonymity that the government heard the banks and their concerns. “The government has given the comfort. We are hopeful that our worries will be resolved. More clarity will definitely emerge in the next three-four days. We are expecting some more steps from the government,” he added.
Another bank chief, on being asked about a situation when telecom companies are not able to pay government dues, said, “If bank guarantee is invoked by DoT, then our liability will rise. If telecom companies do not pay, then after 90 days it becomes a non-performing asset.”
State Bank of India’s (SBI) chairman, after meeting with the government on Thursday, said that the telecom sector was important and that a combination of the measures announced by the government and that of the operators themselves would help ease the stress. Telecom players including Airtel and Vodafone Idea had sought some relief from the telecom sector. This includes request to not press for the AGR liability payment and grant waivers, not levying spectrum usage charges (SUC) on non-licenced revenue, reduction of licence fee and SUC rates and use of GST credit for payment of government levies.