Mahanagar Telephone Nigam Limited (MTNL), a Central Public Sector Enterprise, has officially been classified as a non-performing asset (NPA) by the State Bank of India (SBI), the telecom firm confirmed in an exchange filing. The bank added that MTNL now owed a total of Rs 325.53 crore as of September 30. This declaration follows a similar downgrade by Punjab National Bank (PNB) on September 9 and other public sector banks.
In a letter addressing MTNL, SBI wrote, “You have been enjoying credit facilities in the nature of a Term Loan from the bank, with the Term Loan Account Number 367266589**. The instalment and interest payments for this account became overdue as of June 30, 2024, due to non-payment. As 90 days have passed, the account is categorised as an NPA (sub-standard) effective September 28, 2024.”
As of September 30, 2024, the total outstanding debt of MTNL to SBI stands at Rs 325.52 crore, with rs 281.62 crore classified as ‘overdue’. SBI has called for immediate payment of this overdue sum to regularise the account and cautioned that failure to comply would lead to the imposition of a penal interest rate on the outstanding balance.
Following SBI’s classification of MTNL as an NPA, other banks such as Union Bank of India and Bank of India have already categorised the company’s debt in the same manner. It is anticipated that additional lenders, including Punjab & Sind Bank and UCO Bank, may soon follow suit.
MTNL’s mounting debt
MTNL’s financial situation has been deteriorating, with total debt reported at Rs 31,944.51 crore as of August 30, 2024. At the beginning of August, MTNL informed the stock exchanges that it had defaulted on bank loan payments worth Rs 422.05 crore. This includes payment of Rs 155.76 crore on debt raised from Union Bank of India, Rs 40.33 crore from Bank of India, Rs 40.01 crore from Punjab & Sind Bank, Rs 41.54 crore from Punjab National Bank, and Rs 4.04 crore from UCO Bank.
SBI seeks details on MTNL’s land monetisation plan
Additionally, SBI is seeking details on MTNL’s land monetisation plan, which had previously been submitted with detailed year-wise cash flows. The bank asked for the current status of this plan, especially concerning the memorandum of understanding (MoU) signed with the National Buildings Construction Corporation (NBCC) to develop a 13.88-acre land parcel on Pankha Road, New Delhi, for residential and commercial purposes. SBI specifically inquired whether the proceeds from this project would be used to repay outstanding loans.
MTNL has identified 158 properties in prime locations across Mumbai and Delhi for outright sale, with an additional 137 vacant properties available for rent – 103 in Mumbai and 34 in Delhi.
SBI has cautioned that if MTNL fails to meet its payment obligations within the timeframe, the bank will have no choice but to initiate legal proceedings to recover the full loan amount along with interest, and may proceed with ‘enforcement of securities’ without further reference to MTNL.
First Published: Oct 05 2024 | 3:51 PM IST
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