Follow Us:

Bankers warn telecom sector may default because of debt stress

IANS | New Delhi |

Banks which have lent to telecom companies are worried about the financial health of the sector which is under debt stress. Many of them feel there may be defaults in the future.

"The bankers are worried. They feel one might see defaults in future unless some solution is found soon," said an official.

Four banks —State Bank of India, Punjab National Bank, HDFC Bank and Axis Bank—on 14 June met the members of the inter-ministerial group (IMG) formed to look into the health of the telecom firms.

The telecom sector's debt is estimated to be over Rs.4.6 lakh crore.

None of the officials or the bankers were ready to provide detailed information on what was discussed during the two-hour meeting. 

Punjab National Bank officials, coming out of the meeting, admitted that there was stress in the sector and that there was an urgent need to find a solution. They were not willing to come on record since they were not authorised to talk to the press. The officials said that revenues in the sector were coming down and this may further worsen the situation.

SBI's exposure alone to the telecom sector is around Rs.70,000 crore.

The bankers may meet the IMG, composed of officials from the finance and communications ministry, again soon.

Axis Bank officials said liquidity has to increase in the telecom sector, otherwise the situation will deteriorate.

This is the third meeting of the group in the series of stock-taking meetings. The officials met four telecom firms —Reliance Jio, Reliance Communications, Aircel and Tata Teleservices—on 12 June. A meeting with BSNL and MTNL was held on 13 June.

Bharti Airtel and Vodafone India are scheduled to meet the group on 16 June.