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MIB squashes tripartite agreement between DTH operators and money lenders

The Ministry has decided to do away with the provision that enabled DTH operators to use their license as security for obtaining loans from financial institutions

BestMediaInfo Bureau | Mumbai | October 7, 2015

MIB-LOGO

The Ministry of Information & Broadcasting (MIB) has issued an order, wherein it has decided to do away with the provision that entitled Direct-to-Home (DTH) operators to use their license as security to obtain loan from money lenders and financial institutions.

The earlier practice involved the DTH operator entering into a tripartite agreement involving the licensor and the money lenders. In 2009, the MIB had made a provision for this practice after it received various requests from the DTH licensees for assignment of their License Agreement as security to the banks/ financial institutions for receiving financial loan/ assistance for the setting up/operation of DTH services. No procedure had been prescribed earlier as to under what terms and conditions such a request would be considered by the Ministry.

After examining the matter in light of the provisions contained in Article 2.2 & 6.4 of the DTH License Agreement and the procedure followed in the telecom sector, the MIB had passed an order dated December 3, 2009, that stated that  all DTH Licensee(s) desirous of assigning their License Agreement as security to the banks/ financial institutions for receiving loans shall be required to execute a tripartite agreement between the licensor, the licensee and the lenders before grant of permission for assignment of the License Agreement as security to the lenders for receiving such financial assistance.

Six years on, most DTH operators have settled into their businesses and as such they didn’t feel the need to continue with this practice. As a result, the order dated December 3, 2009 now stands cancelled.

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