Finmin working on implications of 2G judgement on banks

 The Finance Ministry is working out the financial implication of the Supreme Court judgement to cancel 122 telecom licences on the banking sector.

"We have to see the implication. Officers are working on the impact of judgement on the banks...we will soon have a clear picture," a senior finance ministry official said.
Several lenders including the State Bank of India, ICICI Bank, Punjab National Bank and IDBI Bank have extended credit to the telecom companies whose licences have been cancelled.

The Supreme Court earlier in the day cancelled 122 2G spectrum licences granted by former telecom minister A Raja on the ground that they were issued in a "totally arbitrary and unconstitutional" manner.

Imposing a fine of Rs 5 crore each on three telecom companies which offloaded their shares after getting the licenses, the court directed regulator Telecom Regulatory Authority of India (TRAI) to make fresh recommendations on allocation of 2G licences.

Earlier in the day, Finance Minister Pranab Mukherjee said "judgements have come and we will have to examine judgements and its implications. Government will examine it".
Banks have varied exposure to the telecom companies involved in the case.
Country's largest lender State Bank of India (SBI) said the bank has fund based exposure of Rs 1,100 crore in telecom companies affected by the apex court order.

"I don't think we will be affected much by the verdict. We have a fund-based exposure of Rs 1,100 crore in five accounts, while another Rs 3,400 crore are non-fund based, which is based on a guarantee of roll-out. Now that the licences are cancelled that guarantee is not fulfilled," SBI Deputy Managing Director Santosh Nair said.

"For the Rs 1,100 crore, all the accounts are from corporate houses with whom we have long term relationships. The corporate house behind the licencee will help us or we also expect them to bid again at the time of the new auctions, which can secure our funds," Nair said.

Corporation Bank Chairman and Managing Director Ajay Kumar said: "We have Rs 146 crore exposure to Videocon Mobile. Though it is a secured funding, we are a bit worried as to how it will pan out post the Supreme Court verdict".

He also said: "We have to review the account in the light of this development though this has been a standard asset so far". According to Indian Overseas Bank Chairman and Managing Director M Narendra, the bank do not have exposure in these telecom companies.

"We have got exposure of 1.21 per cent of total loans in telecom sector including telecom infrastructure," Narendra said, adding, the bank has sanctioned Rs 2,200 crore to telecom sector.