MoF clean chit to banks in 2G scam

NEW DELHI: The finance ministry has given a clean chit to banks that lent to telecom companies awarded 2G licences in 2008.

“Banks have submitted the details including terms of lending and so far there is no evidence of irregularities in loan disbursals,” said a senior finance ministry official.

He said the government has not initiated vigilance enquiries against chiefs of any public sector bank or other bank officials even as the Central Bureau of Investigation has started to seek out details from banks.

The CBI was asked by the Supreme Court to broaden the scope of its investigation into the 2G scam to look into bank lending to the sector. The finance ministry said there were no systemic issues, but CBI can investigate if it feels there are individual cases of impropriety.

The finance ministry is more worried about the losses banks may suffer if some of the licences are cancelled.
“The banks have shared that if there is cancellation of 2G licences, the allottees will find it difficult to make repayments, which can lead to a rise in bad assets,” he said. Banks had sanctioned loans to these companies against the security of 2G licences.

The clean chit to banks comes after North Block closely scrutinised the state-run banks’ exposure to the telecom sector.

‘No systemic ’concerns

“Specific details such as total loans sanctioned, outstanding amount and company-wise details were sought. There are no concerns,” the official said.

The Reserve Bank of India in its second Financial Stability Report had ruled out any systemic concerns on the issue of bank exposure to telecom companies. “Detailed enquiries have been undertaken, although preliminary findings do not point to widespread irregularities or systemic concerns,” the RBI report said pointing out to both issues of loan to telecom companies and bribe-for-loan scam.

“If the banking regulator is not worried, we don’t find it necessary to carry another set of independent investigations,” the official said. The banking regulator had, however, cautioned that the questioning of telecom lending may impact the flow of credit into the sector as banks may adopt a cautious approach towards these segments.

The Supreme Court of India, which is monitoring the investigations into the 2G scam, had expressed concerns over loan disbursal to telecom companies. It had observed that public sector banks have provided loans of nearly Rs 10,000 crore to 2G spectrum licensees, which is “astonishing”, and had called for a “holistic investigation”.

According to the RBI data, banks’ exposure to telecom companies stood at Rs 59,312 crore at the end of 2009-10 . Almost all state-owned banks have offered 2G loans in 2008-09. An SBI-led consortium had lent Rs 10,000 crore to one of the winners in the 2G spectrum auction.