Guess what? Even banks played a role in the 2G scam

Looks like even public-sector banks can’t escape the long shadow of the 2G scam. In the recent past, media investigations showed that public-sector banks had a large exposure to companies whose 2G licences were cancelled by the Supreme Court today. However, official investigations on how that came to be have only begun.

In January , the Central Bureau of Investigation (CBI) started a probe into the alleged role of state-run banks, including State Bank of India, in funding telecom companies.

The Pioneer, which carried out detailed investigations into the role of banks in the 2G scam, said that state-run banks provided more than Rs 26,000 crore to the five companies - Swan Telecom, Unitech, Loop, Datacom (Videocon) and STel - involved in the 2G case. Most of the loans were disbursed after the CBI and Central Vigilance Commission (CVC) had begun investigating the scam, the newspaper alleged.

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[caption id=“attachment_201764” align=“alignleft” width=“380” caption=“SBI, one of the biggest lenders to the sector, has said to Reuters, said it is not worried about its telecom loans. Reuters”]  [/caption]

PTI also reported that following an enquiry by the CBI, public-sector banks were found to have allotted Rs 10,000 crore to Unitech and Rs 1,538 crore to STel, based on the licence papers issued by the Department of Telecom (DoT).

In the case of Unitech, a bulk of the loans (Rs 8,000 crore) came from SBI, according to Pioneer reporter J.Gopikrishnan in this article. Videocon also received Rs 8,000 crore - Rs 1,000 crore came from SBI, while Rs 7,150 crore came from SBI Cap Trustees.

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According to The Pioneer, STel received the funds from IDBI and IDBI Trusteeship Services Limited between July and November 2009. Swan Telecom got another Rs 1,900 crore or so from the Punjab National Bank and the Bank of Baroda; the company was granted money even before it got a licence. Other banks that gave it loans: SBI (Rs 750 crore), Bank of Baroda (Rs 400 crore) and IDFC (Rs 200 crore).

According to The Pioneer report, Loop also received Rs 400 crore from ABI.

Overall, about 3 percent of the total loan porfolio of the banking sector is accounted for by the telecom sector**,** shows a CLSA report. With their licences being cancelled, the underlying assets of these loans has gone bust and will have serious implications on the bad loan provisions and actual bad loans of these banks.

For now, the banks are putting on a brave face. SBI, one of the biggest lenders to the sector, has said to Reuters, said it is not worried about its telecom loans.

The bank said its exposure to the scam tainted companies stood at Rs 1,100 crore and bank liabilities totalled Rs 3,400 crore, which has now been cancelled, it said today.

Central Bank of India and IDBI have also issued statements saying they would sort things out with individual telecom companies.