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Banks will have to pay price if any telco files for bankruptcy: SBI Chairman

Banks will have to pay price if any telco files for bankruptcy: SBI Chairman
Representative image Image Credit: ANI

SBI Chairman Rajnish Kumar on Saturday said banks will "have to pay the price" in case any telecom firm files for bankruptcy, a day after the Supreme Court made it clear that telecom companies will have to pay the Rs 1.47 lakh crore in past dues. The chief of the country's largest lender State Bank of India (SBI) said it is in the "wait-and-watch mode" and the onus of ensuring telecom companies' compliance with the Supreme Court order lies with the Department of Telecommunications (DoT) under the government.

"If there is a negative impact on any enterprise, it impacts a larger ecosystem, whether it is banks, whether it is employees, whether they are vendors, consumers, so everybody gets impacted. So, that impact, when it comes, we will have to pay the price," Kumar said, when asked about the impact on banks if telcos move towards bankruptcy. He was speaking to reporters on the sidelines of the unveiling of artworks namely 'Manasvi' and 'Tapasvi' at the Local Head Office (LHO) here. Around 400 computers, more than 2,000 microchips, over 400 keyboards and above 200 discarded credit cards were used to create the two artworks.

He added that the closure of any corporate impacts the country's economy and, therefore, the endeavor is to prevent the shutting down of any enterprise. Asked if any telco account is currently classified as a non-performing asset (NPA), he said there are two accounts, Aircel and RCom, that went into bankruptcy.

Besides, he said that SBI will not pass on the burden of the hike in a premium of deposit insurance to its customers. "We never recovered the premium from customers, we will not do it now either. As far as the impact of the rise from 10 paise to 12 paise is concerned, earlier if we were paying Rs 3,000 crore now we will pay Rs 3,600 crore premium," he said.

Following the failure of a number of cooperative banks, with Mumbai-based PMC Bank being the latest and the largest last year, the government hiked the deposit insurance coverage to Rs 5 lakh from Rs 1 lakh in the Union Budget 2020-21. "The premium is something which, we consider, will increase from 10 paise to 12 paisa per Rs 100 for the time being. So, the impact on banks' balance sheets is not likely to be much," RBI Deputy Governor B P Kanungo said recently.

RBI Governor Shaktikanta Das on Saturday said the central bank will have internal discussions in case there are any issues arising out of the Supreme Court order regarding adjusted gross revenue (AGR) dues to be paid by telecom companies. On Friday, the Supreme Court threatened contempt proceedings against top executives of Bharti Airtel, Vodafone Idea and other telecom firms for failing to comply with its directive to pay an estimated Rs 1.47 lakh crore in past dues.

However, Das did not offer any specific comments about the order, which might have ramifications on banks in terms of their exposure to the financially-stressed telecom companies. The payments to be made by the companies include Rs 53,000 crore by Vodafone Idea, Rs 35,500 crore by Bharti Airtel and Rs 14,000 crore by the now-defunct Tata Teleservices.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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