SBI allays fears of tightening screw against telecom sector, says it hasn't cancelled unused credit lines

Reserve Bank of India had recently asked banks to review their exposure to the debt-ridden sector

Country's largest lender State Bank of India (SBI) said on Friday that it has not cancelled unused line of credit to debt-laden telecom sector amid reports of tightening of screw by lenders.

Reserve Bank of India(RBI) recently asked banks to immediately review their exposure to the telecom sector, which has total debt of about Rs 4.6 lakh crore, and make higher provisions to firewall their business against any future stress.

The sector is facing the squeeze on revenues and profitability in the wake of cut-throat competition following entry of Reliance Jio.

"As regard to withdrawal of these unused line of credit to telecom sector, we have not withdrawn any unutilised limit. As a matter of general practise, we do review all the accounts irrespective of which sector, including telecom," SBI Managing Director B Sriram said here.

 

"In terms of saving our capital we do take informed decisions to try and use limits where it is required," he said.

At the same time, SBI Chairperson Arundhati Bhattacharya said that even for the unutilised limit the bank needs to keep the capital.

She, however, added: "So, we have a cancellability clause for unutilised limits so that we don't unnecessary block up capital. This is a regular review that is taken and where the limits are unused for a period of time, there we simply cancel it."

Asked if SBI is reviewing limits in other sectors, Bhattacharya said the bank is yet to come up with the board policy.

"But more or less we continually look at all the sectors and continually rate all the sectors as to which sectors are good. This kind of a rating goes on for every sector on a quarterly basis and that is already being done," she said.

"Based on that we will take a call by the end of June on what it shows in this particular quarter and accordingly we will bring a policy on how much more of a standard provision we can do," she added.

SBI has exposure of less than 1 per cent in telecom sector.

Sriram said: "As far as our telecom exposure is very minuscule. It was 1.4 per cent, which was RS 18,000 crore. Post merger it has reduced to less than 1 per cent.

"This is the total exposure and of which, generally at any given time, about 70-75 per cent is utilised. It may be utilised by one company and not by others... It's goes around between companies."

Various telecom companies including Airtel, Vodafone and Reliance Jio have, separately, denied cancellation of existing line of credit by any bank.

"No credit lines of Vodafone India have been cancelled by SBI or any other bank. Therefore, Vodafone India remains unaffected by this decision," Vodafone spokesperson said.

"State Bank of India has not cancelled any existing Line of Credit for Reliance Jio," the spokesperson said.