SBI seeks review of SC verdict that ‘spectrum’ does not count as an asset in IBC proceedings

State Bank of India (SBI) has filed a review petition in the Supreme Court of India, seeking reconsideration of its recent ruling that telecom spectrum cannot be treated as an asset under the Insolvency and Bankruptcy Code (IBC).

Background of the Case

The dispute revolves around whether telecom spectrum, allocated by the government to telecom companies, can be classified as a company asset, and used during insolvency proceedings for debt resolution. 

In its February 13, 2026 judgment, the Supreme Court ruled that:

• Spectrum is a natural resource owned by the government
• It is held in public trust, not owned by telecom firms
• Companies only have a limited right to use the spectrum

Therefore, such rights cannot be treated as assets under IBC and cannot be used to restructure or waive government dues. 

SBI’s Arguments: SBI has challenged the ruling on several grounds:

• The judgment did not fully consider key legal and financial aspects
• It could weaken the insolvency framework and credit markets

The bank argues that:

• Telecom firms paid large sums to acquire spectrum usage rights
• These rights were recorded as assets in financial statements
• Banks extended loans secured against these rights

If spectrum is excluded from IBC assets, lenders’ recovery prospects decline and their status as secured creditors is undermined. 

Wider Implications

The case has far-reaching consequences for:

• Banking sector: May lead to cautious lending
• Telecom companies: Reduced access to credit
• Infrastructure sectors: Similar concerns for licence-based industries

SBI has warned that banks may reassess lending to sectors dependent on government licences, including telecom, power, and infrastructure.

Core Legal PrincipleThe Supreme Court’s ruling reinforces the doctrine that natural resources belong to the public and the government acts as a trustee, not a seller of ownership rights. 

Source: FE