FIs counter govt claims on telecom exposure

August 3: "Our exposure in the telecom sector is very minimal. But I do not want to be drawn into any controversy with the governmen...

August 3: "Our exposure in the telecom sector is very minimal. But I do not want to be drawn into any controversy with the government," chairman of Industrial Finance Corporation of India (IFCI) P V Narasimham told PTI.

A top executive in Industrial Development Bank of India (IDBI) also expressed a similar view saying the FIs’ exposure to the sector was "not alarming" as its approach has been very cautious and not aggressive in its lending to the sector.

Defending the bail-out package offered to telecom operators, government had last week said that Indian financial institutions have an exposure of Rs 10,000 crore in the sector and any reluctance to help the industry would turn this exposure into bad loans or non-performing assets (NPAs).

In infrastructure sectors like telecom, lending is done in a phased manner over a period of six to eight years as the gestation period of projects was long, FI officials said.

They said the FI’s exposure would touch the Rs 10,000 crore mark only at the end of eight years and the current exposure could in no way be more than Rs 2,500 crore.

FI sources said among the domestic institutions, only ICICI has some notable exposure in the sector. However, ICICI managing director K V Kamath was not available for comments.

Kamath had chaired a committee set up by the group on telecom (GoT) headed by external affairs minister Jaswant Singh to go into the problems faced by the cellular operators.

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Although his committee’s report was not made public, official sources said he had argued on behalf of FIs in the GoT to get maximum concessions granted to operators.

Infrastructure Development Finance Company (IDFC), another FI, has a small exposure in the sector with commitment to Bharti Telenet, basic operators in Madhya Pradesh. State Bank of India also has a minor exposure in the project.

However, foreign FIs have considerable exposure in telecom with leading institutions such as chase Manhattan and Bank of America having huge commitments in various telecom projects.

While chase manhattan arranged funds over 200 million dollars for escotel, cellular operator for kerala, uttar pradesh (west) and haryana, bank of america has arranged sizeable funds for birla at&t, cellular operator for gujarat and maharashtra.