Amid closure buzz due to rising debt and sinking profit margins, banks led by the State Bank of India (SBI) have asked the Union government to give debt-laden Vodafone Idea more time to clear its tax dues and spectrum fees.

According to government sources, senior SBI officials and representatives of the Indian Banks' Association (IBA) met finance and telecom department officials this month and proposed an immediate breather on the repayment of spectrum dues.

“We've had these discussions with the banks but the issue is the finance ministry needs to be comfortable with the measures,” the government official said.

Vodafone Idea's gross debt as of June 30 was Rs 1.9 trillion, comprising of deferred spectrum payment obligations of Rs 1.06 trillion and an adjusted gross revenue liability of Rs 621.8 billion, its latest stock exchange filing in June showed.

The adjusted gross revenue is the usage and licensing fee that telecom operators are charged by the Indian government. The mobile operator also reported that it owes Rs 234 billion ($3.18 billion) to financial institutions.

The company went off track after the Supreme Court last year ordered the mobile carrier, a joint venture between the Indian unit of Britain's Vodafone Group and Aditya Birla Group's Idea Cellular, to pay just over $8 billion to the government to settle long-standing dues. Vodafone has a stake of about 44% in the company and Aditya Birla owns nearly 27%.

In June, Vodafone Idea's then non-executive chairman Kumar Mangalam Birla warned that without a government reprieve the Indian mobile carrier's “financial situation will drive its operations to an irretrievable point of collapse.”