Concerns about the financial institution's asset quality, which may be impacted the most by the problems faced by Vodafone Idea (Vi), were addressed in IDFC First Bank's annual report. The annual report in turn addressed the concerns that traders may have about the cash-strapped telecom service provider's exposure.

While other lenders have significant exposure to Vodafone in terms of absolute numbers, Yes Bank and IDFC First are the most likely to be hit in terms of percentage of loan books.

After the Supreme Court rejected its appeal to allow the payment of self-assessed adjusted gross revenue (AGR) dues and Kumar Mangalam Birla's resignation as Chairman following his offer to hand over Aditya Birla group's stake to the government, Vodafone Idea is in desperate need of funds to deal with its liabilities and pay dues.

According to IDFC First's Head of Investor Relations, the bank is performing well across the board. However, after the release of Vodafone Idea Chairman's letter to the government in early August, the company's stock has been under pressure and has dropped to the low 40s.

The bank expects the government will resolve the issue in order to maintain a competitive telecom industry, but regardless of the outcome, it is fully prepared, with strong capital buffers to deal with the scenario.

“I would now prefer to promptly deal with the concerns that a handful of you would have regarding our exposure to Vodafone Idea. Allow us to hope that the federal government assists the company; roughly 1.5 lakh crore of the company's total debt is owing to the federal government, so they will be ready to fix this dilemma. In any case, we now have a significant amount of development capital at our disposal", says V Vaidyanathan, CEO and IDFC First Bank Managing Director.

He went on to say that the bank will ride it out without jeopardizing its long-term prospects, and that it would go on to build a fantastic bank from here. As a result, we'll keep our gaze fixed on the longer story. We've dealt with similar situations in the past and have always discovered that if we have a strong and profitable model in place and stick with it for a long time, a single occurrence doesn't detract from the long-term story.

“We'll look into it as an issue of land regulation. We have significant margins in our business since we have a strong legal responsibility foundation made up of low-cost CASA of 50 percent or more. We'll keep compounding our improvements by roughly 25 percent for a long time, and we'll be able to build this guide to whatever size of demand in our lives, whether it's 2 lakh crore, 5 lakh crore, 10 lakh crore, or more”, says Vaidyanathan.