There is a huge boost and relief for the telecom sector with Finance Ministry and Reserve Bank of India deciding that telecom spectrum be treated as ''tangible security', reports CNBC.
The move which will provides greater security to lenders and clear the air of uncertainty to some extent in the wake of the cancellation of spectrum licences, has come at a time when there is near freeze of bank funding.
According to The Hindu, The Finance Ministry wants to secure lenders through the incorporation of “a suitable clause in the draft Tripartite Agreement (for assignment of licence) among the Licensor, Licensee and Lender to provide for termination payment to lenders of an amount equivalent to lower of the licence fee mobilised, or secured loan outstanding, in the event of termination of licence allotted to an operator.”
The RBI has said that in case of default by the borrower, “The bank should have the unfettered right to sell, transfer, assign, exchange or otherwise dispose of the spectrum free of any restraining conditions.”
The development is believed to have taken place following the discussions between the government and the RBI recently after the demand was put forward by telcos that spectrum which so far has been treated as airwaves should be “treated as something that can be mortgaged and borrowing can be done against it”, the report says.
According to CNBC, formal orders have also been communicated to the department of telecom by the department of financial services. DK Mittal, the Finance Secretary said that the RBI will consider securitization on this basis and three to four conditions will be attached to it.