The Reserve Bank of India has found a number of deviations in the State Bank of India?s (SBI) loan book, while lending to certain telecom companies, especially when giving them bridge loans.
For instance, SBI had sanctioned a bridge loan of Rs 25 billion to Uninor in July 2009 for the purpose of partly financing capital expenditure, pending long-term project finance tie-up.
Neither was any financial institution identified nor were there any committed financial tie-up at the time of disbursement. This was a deviation from the established procedure for giving bridge loans. Also, the operator?s roll out plans should have been completed by February 2009 (within a year of getting the licence), whereas nothing was finalized, even while sanctioning the bridge loan (July 2009).
A year later, a regular term loan of Rs 94.75 billion was sanctioned for the entire project, including a sum of Rs 28.50 billion to replace the earlier bridge loan.
However, there was still no tie-up in place for the balance Rs 66.25 billion and so the term loan amount was not released. However, the earlier bridge loan was rolled over till December 2010.
Similarly, bridge loans and bank guarantees given to companies such as Loop Telecom (Rs 7.25 billion), Datacom Solutions (Rs 11 billion) and Etisalat DB (Rs 3.95 billion) were either adjusted against a regular loan issued later or rolled over, despite there being no financial tie up or operations in place.
In another deviation, SBI sanctioned a corporate loan of Rs 25 billion for Reliance Communications for capital expenditure. This was given on an unsecured basis without assessing the credit requirement. Existing rules do not permit unsecured lending on that scale.
