What is likely to happen to Vodafone Idea and how would it impact banks like IDFC First and Yes Bank with large exposures?

As of now there is not clarity on the Vodafone Idea but indications are that the government would intervene and bail out Vodafone Idea for now. At least, that is what industry captains are hoping for now. The idea is prevent an all-out bankruptcy with larger implications for banks and jobs. The problem is more acute for banks who are exposed to the tune of Rs.180,000 crore to Vodafone in terms of loans and spectrum usage fee guarantees.

Among other bankers, this view was also echoed by IDFC Bank CEO, V Vaidyanathan. That is not surprising as IDFC Bank has one of the highest relative exposures to Vodafone and has provided Rs.487 crores towards the account. Its loan exposure is Rs.2,000 crores apart from spectrum acquisition guarantee of Rs,1,244 crores given to Vodafone Idea. Both Birla and Vodafone UK are willing to cede stake to government, so the process would be smooth.