The Department of Telecommunications (DoT) has reportedly initiated discussions with banks to address financial stress in the telecom sector, particularly for Vodafone Idea that urgently requires fund infusion to stay afloat.
To this end, DoT recently held a meeting with senior officials from various banks such as State Bank of India and Bank of Baroda. During the meeting, the discussions are believed to have touched upon the financial condition of Vodafone Idea and the way out. As per industry sources, DoT has asked banks to look for a solution within the prudential guidelines.
Moving forward, more such meetings are expected to take place in the coming days.
Meanwhile, the finance ministry has asked public sector banks to collate and submit data related to their debt exposure to the telecom sector in general and Vodafone Idea in particular.
As per recent estimates, both public and private lenders will be looking at a loss of Rs 1.8 trillion in case Vodafone Idea collapses. A large part of the loans to the lender is in the form of guarantees with public sector banks having a lion’s share of the debt. Among the private sector lenders, Yes Bank and IDFC First Bank may be impacted the most.
As a precursor, some private lenders with a funded exposure have already started making provisions. For example, IDFC First Bank has marked Vodafone Idea’s account as stressed and has made provisions of 15 per cent (Rs 4.87 billion) against the outstanding exposure of Rs 32.44 billion (funded and non-funded).
