Big cloud over banks' Rs 26,000-cr exposure
The Supreme Court judgment on Thursday cancelling 122 telecom licences has raised question marks over the ability of these companies to repay bank loans running into more than Rs 26,000 crore.
The State Bank of India and Punjab National Bank have lent the maximum, accounting for nearly half of loans granted to these companies after 2008.
Banking sources who did not wish to be identified said that the judgment has not factored in the implications that several stakeholders face. Though bankers would have to decide on the future course of action, they could even move court on the issue.
Legal expert said that banks could look at the option of bringing in SARFAESI (the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act to recover a part of the loan by deciding to auction the properties of these companies in case they fail to repay their loans. "However, that would take time and it would be difficult for banks also to liquidate the properties," a senior bank executive of a public sector bank said, adding that the group companies could make part payment.
"Relevant banks may suddenly have huge non-performing assets on their books," Manoj Kumar, managing partner Hammurabi &Solomon, said.
The total exposure of the Indian banking industry to the telecom sector stood at Rs 94,319 crore as on June, 2011, as per estimates.
The Indian banking industry has witnessed the level of bad assets swell in the last few months. The Supreme Court decision would further make things worse for the banks.