2G licence cancellation to affect banks
Major lenders including State Bank of India and Punjab National Bank have lent money to most of the telecom firms whose 2G licences will be cancelled following the Supreme Court's on Thursday verdict.
State Bank of India, the country's largest lender, has funded exposure of Rs.1,100 crore to the affected telecom firms.
Deputy managing director of SBI Santosh Nair said the bank has also issued guarantees for the licences and has non-fund exposure to the tune of Rs.3,400 crore.
"This is basically guarantees issued for the license, if the licences are cancelled these guarantees will also stand cancelled," Nair told a private TV channel.
The SBI's total exposure to telecommunication sector as on March 31, 2011 is over Rs.23,000 crore.
The Supreme Court on Thursday cancelled all 122 licences for 2G spectrum allocated in 2008 during the tenure of the then telecom minister A. Raja.
India's second largest public sector lender Punjab National Bank has exposure to most of the affected companies, sources said.
Indian Bank has exposure to the tune of Rs.39 crore to the affected companies.
Share price of State Bank of India plunged almost 5 percent soon after the apex court verdict. However, later in the day the price rebounded and the SBI scrip closed 0.21 percent down at Rs.2,072.65 at the Bombay Stock Exchange on Thursday.
Punjab National Bank closed 0.21 percent down at Rs.953.50 after slumping to a low of Rs.922.70 in the intra-day at the BSE.
However, reacting to the development, Telecom Minister Kapil Sibal said the apex court verdict would bring clarity in the telecommunication sector and the investors should see it as a good opportunity for investment.
"After this judgment the future is clear. Telecom sector has huge scope for investment," Sibal told reporters.
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