The department of telecom (DoT) has started to return bank guarantees worth Rs 20,000 crore to Vodafone Idea and the Bharti group. The process will be completed by December 31.

Bharti Airtel will get back Rs 8,000 crore while Vodafone Idea will get back Rs 12,000 crore in bank guarantees.

Analysts said this is expected to improve the financial health of debt-ridden Vodafone Idea as its non-fund exposure to banks will reduce and banks, which were earlier not interested to furnish fresh bank guarantees to the loss-making telco due to its precarious financial position, may now extend fresh bank guarantees to the entity.

This windfall for the telcos came after the government cut bank guarantee requirements against statutory dues such as licensee fees by 80 per cent in its latest relief package.

Airtel has received about Rs 4,000 crore over the last few days and Vi has received about Rs 2,500 crore, sources said.

Under the new rule, the telecom firms are required to provide a performance bank guarantee of up to Rs 44 crore for each service for the licence. The old rule had mandated Rs 220 crore as performance bank guarantee.

Similarly, for a financial bank guarantee, telecom operators now need to provide a maximum Rs 8.8 crore per circle against the Rs 44 crore earlier.

The decision came in favour of telcos as it reduces their cash requirement while unblocking the cash they keep with lenders to furnish bank guarantees.