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Banks requests relief measures for stressed operators from the government

December 07, 2017

 

Banks have requested the government to refund payments relating to spectrum to those telecom operators that undergo debt restructuring. In addition, banks have also requested the cancellation of future deferred payment liabilities for this spectrum.

Further, the Indian Banks Association (IBA) has sought returning of the bank guarantees provided by operators, noting that the sector’s debt liability was primarily toward banks and spectrum payment obligations. As per IBA estimates, there had been a 25.5 per cent year on-year fall in adjusted gross revenue (AGR) of the industry in the April-June, 2017 quarter.

According to the IBA, the money will be used for repaying the banks which will prevent loans from turning into non-performing assets (NPA). The IBA made its case by highlighting that the government had allowed similar facility to state-run operators Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) in the past.

Most banks have exposure to debt-ridden companies like Reliance Communications and Aircel, among others, and have been directed by the Reserve Bank of India to make higher provisions for their exposure toward the sector. Meanwhile, banks have also urged the Department of Telecommunications (DoT) to grant urgent relief to the sector as operators are facing difficulty in servicing their debts.

 
 

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