Indian finance ministry proposes spectrum as collateral for loan (India)

The Indian finance ministry has proposed a new policy according to which mobile operators can use their spectrum holdings as collateral for a loan, as reported by ET. The move comes as an attempt to smoothen the functioning of the banking sector as well as help the telecom industry meet its credit requirements.

According to the report, the new policy will enable banks to seize an operator’s airwaves in the event of default or termination of mobile licences. Airwaves are leased to mobile operators by the government for a period of 20 years.

The banking industry has been reluctant to provide loans to mobile operators owing to depleting earnings and slow growth. Further, with the debt faced by the telecom sector mounting up to US$ 56 billion, the finance minister is hopeful that the new regulation will infuse the wireless industry with funds required by operators to increase their business.