Bank guarantee requirement for telcos slashed by 80%

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

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

Similarly, telecom operators will need to provide a financial bank guarantee 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.

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

The move will unblock the cash of telecom operators that they keep with banks to furnish BGs.

Photograph: Himangshu Sharma/Reuters