New Delhi, Jul 26 (IANS): Lending major State Bank of India (SBI) has written to the Department of Telecommunications (DoT) to reconsider its move to cancel Reliance Communications (RCOM) spectrum license.
The request for reconsideration was made via a letter dated July 23 sent by SBI's Chairman Rajnish Kumar to Telecom Secretary Aruna Sundararajan.
The banking major leads the Joint Lenders' Forum (JLF) which has the maximum lending exposure to the company.
As per Kumar's letter, cancellation of RCOM spectrum will lead to irreparable financial harm to SBI and many other PSU banks.
"We understand from Reliance Communications and Reliance Telecom that Department of Telecommunications appears to be contemplating revocation of spectrum allocated to both the companies due to non-submission of Bank Guarantees (BGs) that is to be submitted by the companies on expiry of earlier BGs given by them while bidding and securing license for the allocated spectrum," Kumar said.
"State Bank of India, as part of consortium of banks, are lenders to the above companies and the loans and advances extended by us or consortium of banks are secured by charged hypothecation or mortgage or assignment of assets of above companies in favour of us or consortium of banks."
Kumar informed Sundararajan, that accounts of the above companies became NPA in the consortium's "books and we along with other lenders had initiated debt resolution plans and assets monetisation plans to recover our dues".
"We now understand, that Department of Telecommunications is contemplating to exercise its power to revoke the spectrum allocation to the above companies. We may submit that any such action will seriously jeopardize the efforts of the secured lenders to recover their dues," he said.
"The debt resolution plans and assets monetization plans previously initiated by the secured lenders or company had not seen fruition. The proposed sale of the spectrum and other assets appears to be viable chance of debt resolution for lenders including many public-sector banks."
"In the event of the proposed sale process not culminating due to the possible revocation of spectrum allocation by Dept. of Telecommunications , the lenders may not be able to recover funds lent thereby causing irreparable harm to SBI and all other lenders in the consortium."
Kumar added: "In the meantime, the lenders including SBI are engaging with the companies to examine the possibility of reissue or extending the Bank Guarantee(s) subject of course to all due internal approvals of respective banks".
On July 23, sources had said that RCOM had informed the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) that while Department of Telecommunications (DoT) has raised a demand for payment of Rs 774 crore on RCOM, the said payment has already been made to DoT vide the encashment of bank guarantees by DoT earlier.
According to sources, RCOM therefore, only needs to renew the encashed bank guarantees, which will be payable only in 2019.
Therefore, RCOM has sought some time and the TDSAT granted an extension on this till August 10, 2018.
Sources said DoT is already sitting on excess bank guarantee encashment of around Rs 540 crore. Also, in a July 3, 2018 order, TDSAT has asked DoT to return additional bank guarantee of Rs 2,000 crore to RCOM.