The Reserve Bank of India (RBI) has raised concerns over the large exposure of banks to various telecom companies and of a possible inflation hike due to the sectors’ recent adjusted gross revenue (AGR) based troubles, Mint reported.
The central bank has conveyed its concern to the government and sought relief for telcos. It is “concerned about the Supreme Court order on telecom dues and is watching the industry closely,” a source told the paper, adding that the government is likely to consider RBI’s requests and is working on a potential rescue plan for telcos.
Moneycontrol could not independently verify the report.
RBI has suggested the government allow telcos to make staggered payments over the next two-to-three years. Banks’ exposure to the sector is significant and a telcos’ bankruptcy would burden lenders with non-performing loans (NPLs).
According to Credit Suisse, banks have a fund and non-fund exposure of 1-2.5 percent and 1.5-3 percent to the telecom sector, respectively. Exposure to the most vulnerable players – Vodafone Idea – by some of the largest banks stands around 2-12 percent of their net worth, it added.