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TRAI seeks industry views on exit policy for telecom operators

The regulator said the DoT had requested it in December 2011 to recommend an exit policy for licencees of all types of licences that wish to exit from provisioning of telecom services under a licence

New Delhi: In a move that will pave the way for the exit of unsuccessful telecom service providers from the business, the Telecom Regulatory Authority of India (TRAI) on Friday issued a pre-consultation paper on a proposed exit policy for various telecom licence holders, reports PTI.

“To solicit the comments and views from all the stakeholders on issues, implications... to the individual licensees, to the government revenues and to the telecom sector as a whole on the exit policy for various telecom licences, TRAI has released a pre-consultation paper,” TRAI said in a statement.

The last date for submission of responses is 16 January 2012.

The regulator said the Department of Telecommunications (DoT) had requested it in December 2011 to recommend an exit policy for licencees of all types of licences that wish to exit from provisioning of telecom services under a licence.

TRAI has asked for stakeholders’ views on the proposed policy on surrender of spectrum by telecom players and if any refund should be made, along with other provision for the telecom exit policy.

At present, there is an exit option for Internet Service Providers (ISP), but not for other telecom licence holders.

ISPs who have already started Internet services and want to surrender the licence are permitted to do so without any surrender charges, provided they gives due notice to subscribers.

In the case of ISPs that have missed the deadline for roll-out of Internet services, they have the option to surrender the licence by paying 5% of the Performance Bank Guarantee (PGB) as a surrender charge within six months of notification.

All ISPs that have not rolled out services and want to surrender licenses may be allowed to do so within six months from the date of notification by paying 2.5% of the PBG as surrender charges.

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Banks facing more challenges in current environment: RBI deputy governor

“Banks globally are facing more challenges now and macro-sustainability is a necessity but not sufficient for sustainable economic growth. Therefore, putting regulations in place is only one part and their implementation is equally important for achieving growth and sustainability,” RBI deputy governor Anand Sinha said

Pune: Banks worldwide are facing more challenges in the current economic environment and while macro-sustainability is a necessity, it is not sufficient for sustainable economic growth, reports PTI quoting according to a senior Reserve Bank of India (RBI).

Speaking here during the inauguration of a national seminar on ‘Basel III: Implementation Challenges in Banks’ organised by the Bank of Maharashtra, RBI deputy governor Anand Sinha said while regulation is important, so is implementation.

“Banks globally are facing more challenges now and macro-sustainability is a necessity but not sufficient for sustainable economic growth. Therefore, putting regulations in place is only one part and their implementation is equally important for achieving growth and sustainability,” Mr Sinha said.

Mr Sinha, who is in charge of regulation of commercial banks, non-banking financial companies and urban co-operative banks in the RBI, also talked about the 2008 global economic crisis and how the Indian banking sector had withstood it.

He also made an elaborate presentation on the genesis of the crisis, its causes, regulatory reforms following the crisis, implementation issues, structural issues and the impact on growth.

The seminar was attended by RBI general manager Ajay Chowdhary and Bank of Maharashtra chairman & managing director A S Bhattacharya.

The topic of the seminar assumes significance as the RBI earlier this week issued draft guidelines for implementation of Basel-III banking norms in India, which envisage that the equity capital of a bank should not be less than 5.5% of its risk-weighted loans.

It also recommended that Tier 1 capital, comprising pure equity and statutory and capital reserves, must be at least 7% and total capital must be at least 9% of risk-weighted assets (RWAs).

It has also suggested setting up a capital conservation buffer in the form of common equity of 2.5% of RWAs.

It is proposed that the implementation period of minimum capital requirements and deductions from common equity will begin from 1 January 2013, and will be fully implemented 31 by March 2017, it said.

The central bank had invited comments and feedback on the draft guidelines, including the implementation schedule, by 15 February 2012.

RBI governor D Subbarao had earlier said Indian banks will have to incur additional costs to build capital buffers to comply with Basel-III rules.

The draft norms have been adopted from the Basel Committee on Banking Supervision’s (BCBS) comprehensive reform package entitled, ‘Basel III: A global regulatory framework for more resilient banks and banking systems’, announced in December 2010.

The objective of the draft guidelines is to improve the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source, thus reducing the risk of spill-over from the financial sector to the real economy.

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