Indian licences may act as collateral

Published on 03.02.2012

Burdened with debts of US$56bn the Indian telecom sector has struggled to fund investments in recent years. The Finance Ministry has now suggested a policy change to allow mobile operators to use licences as collateral for bank loans, in a move it hopes will unlock additional sources of finance, reports the Economic Times. Licences are granted for a period of 20 years, and could be seized by banks in the event of default. If the policy is adopted, it could apply to the upcoming re-auction of 122 2G licences. The Department of Telecoms is due to unveil a new telecom policy in June, which could contain the new measure, along with expected relaxation on sector consolidation.