Government forms an inter-ministerial committee to study financial health of telecom sector

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The Government designed panel would look into issues related to the sector’s financial health, which has taken a beating due to aggressive competition triggered by the entry of Reliance Jio.

The inter-ministerial committee will look into the financial woes of the telecom sector and would have about three months to hand over its views & solutions to the government.

According to people in the know, the panel will have six to eight members, including two person from the telecom department and one each from the departments of revenue & economic affairs.

“The suggestions will be given to the telecom ministry, which will then go to finance ministry, and then, if needed, to the Cabinet for action,” a senior government official said.

Telecom minister Mr. Manoj Sinha recently said that the inter-ministerial panels were being set up to examine all issues of viability and repayment capacity and provide recommendation for resolution of stressed assets at the earliest.

Similarly for the power sector also an inter-ministerial panel is being created. The Reserve Bank of India (RBI) last month asked banks to review their exposure to the telecom sector immediately, which has a debt of nearly Rs 4.9 lakh crore, and make higher provisions to firewall their business against any future stress.

Public sector banks like State Bank of India (SBI) and Punjab National Bank (PNB) have huge exposure in the form of loans given to the telecom companies. Under this competitive pressure, major carriers like Bharti Airtel, Idea Cellular and Vodafone India have reported depressing quarterly results in the three months ended December, and sector analysts expect another weak quarter, ended March 31. Earnings announcements are set to begin later this week.

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Himani Sharma, From ITvoir News Desk

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