Banks risk huge increases in NPAs

Mumbai, Ta. 15 February 2020, Saturday

The concerns of the banks that have financed the telecom companies have now increased following the Supreme Court's ruling regarding the adjusted gross revenue (AGR) that telecom companies have to pay to the Department of Telecommunications (DOT). It is estimated that telecom companies have to pay banks Rs 5.5 trillion. There is a risk that banks' NPAs will rise.

The telecom companies missed yesterday's deadline for AGR payments and the company's fate has also worsened when companies, especially Vodafone Idea, are not in a position to pay AGR.

Vodafone Idea chairman Kumar Mangalam Birla has already made it clear that if the government does not provide any relief, it may be time to close the company, in which case the credit of the banks will be put at risk, ”said a banker.

Vodafone Idea pays Rs 5 crore for AGR and Airtel is expected to pay Rs 5 crore. Telecom companies will have to pay Dot Rs 1.8 trillion by AGR by March 8.

SBI ranks first among public sector banks with the highest number of loans to telecom companies, with Rs 5.6 crore. SBI has provided a loan of Rs 5 crore to Vodafone Idea.

The decision to close Vodafone will prove to be a major blow to the banking industry, a banker said. In this case, there is a way to recover the money and it is to raise money by selling the old 3G spectrum. Vodafone Idea is estimated to have a total exposure of around Rs 1 crore together with various banks including SBI, IDBI Bank, Yes Bank, PNB, IDFC.