Kapil Sibal, Minister of Telecommunications and IT, has written to the Prime Minister, Dr Manmohan Singh, seeking his intervention in getting banks to start lending again to telecom companies, say news reports.
Over the past few months, domestic and international banks have become wary of extending loans to telecom companies for fear of coming under the scanner of investigating agencies post 2G scam.
Sibal has also urged the Prime Minister to convene a meeting with the Finance Minister to resolve the issue, which may halt telecom operators’ expansion plans.
In the letter, Sibal said, ?Many of these companies have borrowed heavily to pay the 3G auction fees. They are now facing difficulty in raising resources to undertake the very business that formed the basis of valuation of spectrum. This situation, if not remedied swiftly, could embroil the sector in a financial and legal quagmire. Even more importantly, it would be severely detrimental to the growth of the telecom sector as a whole.?
Telecom operators are finding it difficult to raise fresh funds after the Supreme Court recently came down heavily on a few banks for lending substantial amounts to new 2G licensees by completely ignoring the risk factors.
The Central Bureau of Investigation is also examining the loans extended to some of the new players, including Swan and Unitech Wireless.
?Reportedly, there is reluctance among bankers to finance normal business activity in the sector. The cause is stated to be fear that any transaction may attract adverse attention from some investigating agency or judicial forum in the future. Hence, the belief that safety lies in avoiding financing the sector altogether,? Sibal further said in his letter to the Prime Minister.
