New Delhi, Feb 15 (SocialNews.XYZ) Any business closure will impact the entire ecosystem of banks, government, vendors and employees, SBI chairman Rajnish Kumar said on Saturday in reference to a possibility of stressed telco Vodafone Idea shutting shop.
"Any business which is closed in telecom or in any other sector, it impacts everybody -- banks, employment, taxes (government) and the economy at large. If there is any negative impact from any enterprise, there is a larger impact on the whole ecosystem -- be it banks, employees, vendors, consumers. As far as impact on banks is concerned, (if Vodafone Idea were to become bankrupt) we will have to pay the price," Kumar said on the sidelines of an SBI event.
The Supreme Court's AGR (adjusted gross revenues) order puts at risk the nearly Rs 31,000 crore loans to Voda-Idea by several banks, whose survival is now in doubt.
In a regulatory filing, Vodafone Idea on Saturday said it is currently assessing the AGR dues it has to pay and will make the payment in the next few days. But even then though this immediately ruled out the company going towards bankruptcy or shutting operations, its ability to remain as a going concern for a long period without government support is still under doubt.
"The company proposes to pay the amount so assessed in the next few days. As disclosed in the company's financial statements for the quarter ending December 31, 2019, the Company's ability to continue as a going concern is essentially dependent on a positive outcome of the application for modification of the supplementary order", it said.
On the recent hike in deposit insurance to Rs 5 lakh from Rs 1 lakh, Kumar said SBI would not pass the increase in premiums to the customers. As the insurance cover stands increased, the banks will pay a premium of 12 paise against 10 paise per Rs 100 deposit.
"We will not pass the increase to customers. Earlier too we never passed premiums to customers... earlier if we were giving Rs 3,000 crore, now we will give Rs 3600 crore as premiums," Kumar said.
As per DoT calculations, Vodafone Idea's dues are Rs 53,000 crore. But much of the focus is on the Vodafone Idea which is in an extremely weak financial position with the latest Q3 losses of over Rs 6,000 crore, Rs 1.20 lakh crore in debt, a declining customer base and revenues. Its chairman K.M. Birla has sounded out multiple times that if it doesn't get any relief from government, it will have to look at shutting operation. One of the parents of VIL, UK- based Vodafone has already ruled out any equity infusion in VIL.
Source: IANS
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