According to a decision by the Ministry of Communications and IT, the telecom operators will not be allowed to pledge their licensed spectrum as collateral while borrowing funds from the banks. With this, the Department of Telecommunications (DoT) has declined to sign the tripartite agreement with the telecom operators and banks for the spectrum-collateral arrangement.

According to the ministry, the frequency airwaves are a natural resource and therefore, the private players cannot mortgage it for seeking funds from the banks and other financial institutions. It added that the ministry is the requisite authority to take care of the spectrum and so the control of the spectrum and its valuation should vest with it.

Earlier, the telecom companies borrowed funds from banks with the spectrum won by them as the collateral. This, in turn, gave the control of the spectrum to the banks and any default on part of the operators would lead to the asset (spectrum) being surrendered to the banks. However, the ministry has maintained that the spectrum is a sovereign asset and DoT is the only authority to get charge of the spectrum.