DoT Releases Bank Guarantees worth ₹9k Crore to Jio, Airtel and Vi

The DoT has released bank guarantees worth around ₹9,200 crores of Reliance Jio, Bharti Airtel, and Vodafone Idea had deposited for the license fee and spectrum usage charges.

DoT Starts Releasing Bank Guarantees

The government had announced the move as a part of the telecom relief package on 15 September. According to sources cited by PTI, the DoT has released ₹4,000 crores in bank guarantees for Bharti Airtel. What's more, the DoT released bank guarantees worth ₹2,500 crores to Vodafone Idea. While the DoT had returned BG of around ₹2,700 crores to Reliance Jio last month, the source added.

In October, the telecom department reduced the requirement by 80%. Informing of the BGs reduction, the DoT had said, “the Licensee shall submit a Financial Bank Guarantee valid for one year from any Scheduled Bank or Public Financial Institution, duly authorized to issue such Bank Guarantee… Initially, the financial bank guarantee shall be for an amount of ₹50/25/5 crore (for category A, B, C service areas, respectively), which shall be submitted before signing the License Agreement”.

Also, the DoT had said that it will reduce the BGs by 80%. "Subsequently, the amount of FBG shall be equivalent to 20% of the estimated some payable (of license fee for two quarters and other dues, not otherwise scrutinized and any additional amount as deemed fit by the Licensor”. In the case of financial BGs, the telcos will have to submit separately for each service area and service; the DoT could ask for a maximum of ₹8.8 crores.

As such, the telcos will now have to provide a performance BG of up to ₹44 crores for each service. Earlier, the same was ₹220 crores under the old rule. However, the rule will not apply when BGs have been presented due to any court order. Furthermore, the rules will not apply to telecom operators currently going through the liquidation process.

This will free up some much-needed cash for telcos who have been going through a cash crunch.