The Telecom Regulatory Authority of India (TRAI) is pushing for an amendment to the TRAI Act, 1997, to grant itself stronger financial enforcement powers. These include the authority to impose binding penalties, demand bank guarantees, and independently recover dues from telecom operators, according to a LiveMint report dated July 24, 2025, which cited three government officials.
While TRAI currently regulates service quality, tariffs, and consumer protection, officials say it lacks adequate powers to enforce compliance. “TRAI cannot impose strong penalties, attach bank accounts or properties in case of violation, and ask for bank guarantees,” said the first of the three officials cited in the report. These limitations in the TRAI Act, the official added, make it difficult for the regulator to effectively enforce rules and ensure compliance in the telecom sector
The regulator is preparing a formal proposal seeking amendments to the Act, which will be sent to the Department of Telecommunications (DoT) under the Ministry of Communications. The matter was also raised during a recent meeting between TRAI officials and the Parliamentary Standing Committee on Home Affairs.
Bank Guarantee Clause Central
A key demand from the regulator is to have the powers to seek bank guarantees from telecom operators. The bank guarantee will bring seriousness in compliance from telecom operators and can be invoked in case they fail to pay penalties imposed by the regulator, the first official was quoted as saying.
In fact, the issue of giving more powers to TRAI also came up at a recent meeting of TRAI officials with the department-related Parliamentary Standing Committee on Home Affairs, a second official was quoted as saying.
Currently, TRAI’s powers are largely advisory and dependent on the DoT for actions such as licence issuance or revocation. In contrast, regulators like the Securities and Exchange Board of India (SEBI) can independently issue binding orders and enforce penalties.
“In almost every country, the regulator has licensing power. In India, the government has kept both licensing and policy making. TRAI has control over a few things such as quality of service orders and tariffs (which is now under forbearance),” said Satya N Gupta, former principal advisor to TRAI, as quoted in the report.
The demand for more teeth also stems from past compliance issues. TRAI had imposed financial disincentives exceeding Rs 140 crore on operators for failing to curb spam messages. The telecom companies challenged the orders before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which granted an interim stay. The next hearing is scheduled for August 8.
“It is not illegal for telcos to challenge such orders by TRAI, but it delays enforcement. Often, operators do not take such orders seriously and also delay compliance with the regulator’s request on sharing of certain data for research and investigation,” the third official was quoted as saying. “TRAI can impose some penalties, but not enough to hold companies fully accountable for serious violations. It lacks the teeth to enforce bigger actions — that’s the problem,” the official added.
Currently, if telecom operators do not comply with TRAI’s order on financial disincentives, the best route for TRAI to recover the same is through the chief metropolitan magistrate. The TRAI Act gives the regulator powers to file a complaint with the magistrate to initiate criminal proceedings if a telecom operator is in violation of TRAI’s directions or regulations, and fails to comply. However, the process is cumbersome and TRAI has not exercised the powers in the last many years, the third official reportedly said.
Recommendations Yet to Be Accepted by DoT
In February, the regulator also recommended to DoT that the authorization regime for licence holders, such as telecom operators should include a provision for a bank guarantee. This guarantee would cover financial dues and ensure compliance with TRAI’s regulations, orders, and directions issued from time to time.
TRAI made these comments in its recommendations on the terms and conditions of network authorizations under the Telecommunications. TRAI had said that compliance with its orders and regulations is a critical component of the efficient performance of authorized entities (telecom service providers). However, according to the report, the DoT has not accepted these recommendations.
Bank guarantees serve as financial security for telecom operators’ obligations, including licence fees, performance charges, and penalties. If a guarantee is invoked, the bank pays the specified amount to the beneficiary institution, and the telecom operator is then required to promptly reimburse the bank.
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