NEWDELHI: “Today’s Supreme Court judgment will certainly hit the banking sector,” says Amitabh Singhal, Director of Delhi-based Telxes Consulting. According to a report in Credit Lyonnais Securities Asia, banks’ exposure to the telecom sector in India has grown significantly since 2008-09.
A senior State Bank of India official said the sector exposure of Indian banks in telecom is estimated at Rs 28,000 crore and this is unlikely to go up with this SC judgment. “Out of the Rs 28,000 crore, SBI and Punjab National Bankaccount for more than 50 per cent of the loans to telecom companies,” the official said.
Rest is by many public sector banks like Axis Bank, Canara Bank, Bank of Baroda, Oriental Bank of Commerce withprivate sector Yes Bank and HDFC Bank too investing in telecom.
Banks give loans to operators against the spectrum that comes bundled with licence.
Now that the SC has cancelled 122 licences, the loans can’t be repaid by the operators; hence it becomes a Non-Performing Asset or bad loans.
Hemant Joshi, partner, Deloitte Haskins and Sells, says, “Foreign investors are also likely to adopt a cautious approach while taking investment decisions in India.” India received about Rs 48,000 crore FDI in the telecom sector from April 2000 to March 2011.