Telecom Department slashes bank guarantee requirement for telecom operators by 80%

The Department of Telecom has slashed performance and financial bank guarantee requirements of telecom operators by 80 per cent, according to a licence amendment note issued on Wednesday.

The amendment has been made in old telecom licences in the UASL (Unified Access Services licensee) category and new licences that were started in 2012- Unified Licence (UL) category.

The move will unblock cash reserves of Bharti Airtel, Reliance Jio, Vodafone Idea, BSNL and internet licence holders like Tata Communications, Atria Convergence Technologies etc that they have kept with banks for securing bank guarantees (BG).

Under the amended norms in UL, telecom operators will be required to provide a performance bank guarantee (PBG) of up to Rs 44 crore for each service for the telecom licence compared to Rs 220 crore mandated under the old rule.

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Similarly, telecom operators will need to provide a financial bank guarantee (FBG) of maximum Rs 8.8 crore per circle now, against the previous requirement of Rs 44 crore.

The rule will not be applicable in cases where bank guarantees (BG) have been furnished due to any court order or are subject to any litigation, the licence amendment note said.

In the case of UASL, there were three different amounts of FBGs that were charged - Rs 50 crore for each A category telecom circle, Rs 25 crore for B service area and Rs 5 crore for C category circles - that has been reduced to 20 per cent through the amendment, which has been issued with immediate effect.

"The PBGs and FBGs of existing licensees shall be revised to 20 per cent of the current total amount held by the licensor...," the amendment note for UASL said.

The new rules will not apply to telecom operators, who are currently going through the liquidation process.

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