Bank agreed to bear 20% injury! Government banks giving loans to MTNL may be ready to lose losses

The government bank, lending to the decaying telecom company Metropolitan Telephone Corporation Limited (MTNL), may agree to incur 20 per cent losses in its debt of Rs 8,144 crore in the company. The loan given by banks to this government-owned telecom company has become a non-performance and NPA. The MTNL joint lender forum recently discussed the issue and has told the department of financial services its intention. The Joint Lending Forum consists of 7 public sector banks. Many people who know about the development have confirmed it.

One officer said, ‘MTNL had asked for 40 per cent of the total dues to the government banks a few months ago and also said that they would have to give up the loan of 60 per cent. But this thing was not acceptable to us. We are a warmist body institution, so we cannot tolerate this kind of loss. We hope that the Department of Telecommunications and MTNL will listen to us. MTNL is a public sector undertaking, so government level talks will be more important.

Union Bank of India has the highest number of Rs 3,543 crore among the seven public sector banks who are loans in MTNL. After that Indian Overseas Bank Rs 2,319 crore, Bank of India Rs 1,053 crore, Punjab National Bank Rs 454 crore, State Bank of State Bank of India, Rs 260 crore of UCO Bank and Rs 176 crore of Punjab & Sindh Bank Are trapped in MTNL was not able to repay the debt of public sector banks in time last year. The consent of banks to face losses was asked by writing emails to the Department of Telecommunications, Ministry of Finance, MTNL and seven public sector banks, but the answer did not come till the news was written.

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Three senior bankers said that no meeting has been held recently with MTNL or Telecommunications Department, but there is an internal discussion in the government. Senior Director Sanjay Aggarwal in CARAMARAGE ratings said, ‘According to the rules of the Reserve Bank of India, banks have to keep 15 per cent of the total stuck loan for the first time if a safe asset is placed in the NPA category. In such a situation, there is a possibility that the banks have kept the required amount separated for the stuck loans.

MTNL’s net deficit increased to Rs 890.3 crore in the second quarter of FY 2025, which was Rs 792.8 crore in the second quarter of FY 2024. With this, the company’s operational income in the quarter ended September 30, 2024 declined by 11.9 per cent to Rs 174.23 crore compared to the same period last year. In the second quarter of the current financial year, the total expenditure of MTNL rose 4.4 per cent to Rs 1,217.56 crore.

The central government holds 56.25 per cent stake in MTNL. MTNL shares on Bombay Stock Exchange rose 4.21 per cent to close at Rs 45.3 today.

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