SBI labels MTNL as non-performing asset amid Rs 325.53 crore debt crisis

The State Bank of India ( SBI ) has officially classified Mahanagar Telephone Nigam Limited (MTNL) as a non-performing asset (NPA), as confirmed by the telecom company in a recent exchange filing.

As of September 30, 2024, MTNL's total outstanding debt to the bank stands at Rs 325.53 crore.

This classification comes on the heels of a similar downgrade by Punjab National Bank (PNB) on September 9, along with actions from other public sector banks.

In a formal communication to MTNL, SBI stated, “You have been utilising credit facilities in the form of a Term Loan from the bank, specifically under Term Loan Account Number 367266589**. The payments for both principal and interest for this account became overdue as of June 30, 2024, due to non-payment. With 90 days having elapsed, the account is now categorised as an NPA (sub-standard) effective September 28, 2024.”

MTNL’s financial troubles deepen

As it stands, MTNL owes SBI Rs 325.53 crore, with Rs 281.62 crore classified as overdue. The bank has urged immediate repayment of this overdue amount to regularise the account, warning that failure to do so would result in the imposition of penal interest rates on the outstanding balance.

Following SBI ’s move to categorise MTNL as an NPA, other financial institutions, including Union Bank of India and Bank of India, have similarly classified the company’s debt. There is speculation that additional lenders, such as Punjab & Sind Bank and UCO Bank, may take similar actions in the near future.

MTNL’s financial health has been on a downward trajectory, with total debt reported at a staggering Rs 31,944.51 crore as of August 30, 2024. Earlier in August, MTNL informed stock exchanges of defaults on bank loan payments amounting to Rs 422.05 crore.

This figure includes Rs 155.76 crore owed to Union Bank of India, Rs 40.33 crore to Bank of India, Rs 40.01 crore to Punjab & Sind Bank, Rs 41.54 crore to Punjab National Bank, and Rs 4.04 crore to UCO Bank.