The government on Wednesday cut the performance and financial bank guarantee (FBG) requirement of telecom service providers (TSPs) by 80 per cent, per its latest Unified Access Services (UAS) licence amendment for Rationalisation of Bank Guarantee (BG) note.

According to the amended norms, TSPs will be required to provide a performance bank guarantee of up to ₹44 crore for each service for the telecom licence compared to ₹220 crore under the earlier rule.

Similarly, telcos will need to provide a financial bank guarantee of maximum ₹8.8 crore per circle against ₹44 crore previously.

“This amendment comes into effect with immediate effect. This shall be part and parcel of the UASL Agreement and other ‘terms and conditions’ remain unchanged,” the Department of Telecommunications said in the licence amendment note.

Riders ahead

The rule will not be applicable in cases where the BG has been furnished on a court order or subject to any litigation, the DoT note said adding that the rules will not apply to telecom operators going through the liquidation process.

It said any BG submitted in respect of securitisation of deferred spectrum instalments, including performance bank guarantees, will continue to be held by licensor without any reduction.

“In case of multiple bank guarantees for all the licences/ authorisations held, the licensee shall have an option to submit BGs centrally at one place instead of licensed service areas (LSAs) wise,” it added.

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

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