Vodafone is in discussions with foreign banks to provide counter guarantees to Indian nationalised banks for Rs 85 billion. This follows an order from the Supreme Court asking the operator to furnish a bank guarantee sourced from a nationalised bank and deposit Rs 25 billion in cash with the court.
Vodafone has been asked to deposit cash and furnish a guarantee after it lost a legal battle over a tax claim. The income tax (IT) department had claimed Rs 112 billion as capital gain tax after Vodafone bought Hutch?s Indian operations for $11 billion in 2007.
The Bombay High Court had ruled in favour of the IT department, following which Vodafone moved to the Supreme Court. The telecom company has been given till mid December to deposit the money and early next year to furnish the guarantees
Government-owned banks, including the State Bank of India are expected to step in once Vodafone arranges a counter guarantee from foreign banks. It is believed that the company plans to remit a substantial portion of the required cash deposit from its overseas office.
