An internal report of the Reserve Bank of India has stated that ICICI Bank, the lead arranger and underwriter of the loan to BPL Mobile Cellular, should have acted with more prudence to enable the company achieve financial closure in 2000 itself.
"The company's grievance was not completely baseless as the delay affected operations of the company adversely," the internal RBI report said.
BPL Mobile had written to the finance ministry blaming ICICI Bank for the delay in the financial closure which has since been concluded on July 21. The finance ministry had referred the matter to the RBI.
Last month, deputy governor of RBI, K J Udeshi, had replied to the ministry stating that in the central bank's view, the company's project implementation did not suffer substantially due to the delay in financial closure as ICICI Bank, other banks and financial institutions funded the project from time to time through bridge loans and short-term loans.
The RBI, when contacted, declined to comment on the difference in the contents of the RBI letter to the finance ministry and the RBI's internal report.
The RBI report also said that asking for 100 per cent funding tie-up "did not appear in order," given past circulars of the central bank which suggested that the financial closure may deemed to have been achieved on tie-up of debt as well as equity components "at least to the extent of 75 per cent of the estimated requirements."
The RBI said had the financial closure been completed in 2000 itself when the company had tied up around 87 per cent of the total fund requirement, the short term loans would have been converted to regular project loans with substantial lower rate of interest with an extended repayment schedule. This could have a positive impact on the operations of the company, the report said.
In its letter to the finance ministry, BPL Mobile had said that it had availed bridge loans of Rs 1,133.50 crore (Rs 11.33 billion) as of date against the appraised debt of Rs 1,258.90 crore (Rs 12.59 billion) which were contracted at substantially high rate of interest.
It also mentioned that a substantial portion of drawdowns effected in the last 24 months had been used to pay the interest dues to the institutions instead of network rollout. The delay in the financial closure meant that the company's debt financing cost has been very high due to the high bridge loan rates.
The company also said that the project cost increased by 41 per cent from Rs 2,304 crore (Rs 23.04 billion) to Rs 3,428 crore (Rs 34.28 billion) due to the delay in financial closure.
Eighty two per cent of the total increase amounting to Rs 778 crore (Rs 7.78 billion) was due to higher interest cost. Also, the fixed cost per subscriber has gone up from Rs 43,000 in the earlier business model to Rs 58,000 now significantly impacting the company's competitiveness and cash flows.
© 2026