As telcos’ SOS hits banks, lenders are wishing they hadn’t taken the call

This was one call that Indian banks wished they hadn’t taken. Their exposure to the telecom sector, especially to troubled Vodafone Idea Ltd, is now threatening to add to the pile of stressed assets on their books.

The Supreme Court asked telecom companies to pay up their dues to the government last week and telcos have begun to scramble for the same. Bharti Airtel Ltd paid ₹10,000 crore on Monday, while Vodafone Idea said it would deposit ₹2,500 crore. Bharti Airtel and Vodafone Idea owe the government about ₹34,200 crore and ₹44,000 crore, respectively.

However, things are more complicated than they appear. Vodafone Idea’s total gross debt is ₹1.2 trillion, of which a lion’s share is owed to the government. But bank guarantees back the debt and, if the government decides to invoke these guarantees, banks will have to pay up on behalf of the company.