‘Navratna’ MTNL is now an NPA in SBI’s books – Banking & Finance News

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‘Navratna’ MTNL is now an NPA in SBI’s books – Banking & Finance News

Mahanagar Telephone Nigam (MTNL), a Navratna company, has been declared a non-performing asset (NPA) by State Bank of India (SBI), the state-run telco informed the exchanges on Friday. This comes a month after Punjab National Bank (PNB) downgraded the loan accounts of the company, which provides services in Delhi and Mumbai, to the NPA status on September 9. A few other public sector banks had earlier downgraded the firm.

The total outstanding in SBI’s account is Rs 325.53 crore as at the end of the September quarter of the current fiscal, of which the amount overdue as on September 30 is Rs 281.62 crore.

“In order to regularise the account, this amount is due with immediate effect and to be paid immediately…Your attention is also drawn to the term that in case the overdue(s) are not so liquidated, a penal rate of interest is chargeable on such outstanding,” SBI wrote to MTNL.

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MTNL’s total debt as on March 30, 2024, stood at Rs 30,141 crore, of which PSBs, including SBI, Bank of India, PNB, Indian Overseas Bank, Union Bank of India, Punjab & Sind Bank, and UCO Bank have a total exposure of nearly Rs 8,000 crore. The telco has defaulted on Rs 519 crore in repayments to several lenders between June and August 2024.

Union Bank of India and Bank of India have already classified the debt owned by MTNL as an NPA. After SBI’s move, other lenders such as Punjab & Sind Bank and UCO Bank are also likely to classify MTNL’s debt as NPA.

Additionally, the bank asked the telco to provide the status of the loan facility it has provided MTNL in light of media reports that the government will pay MTNL’s dues and the department of telecommunications’ (DoT) claims that there will be no default in this matter.

SBI also sought clarification on the land monetisation plan, which was earlier provided to it with granular details, along with year-wise cash flows.

The country’s largest bank also enquired about the details of the memorandum of understanding that MTNL has filed with NBCC to jointly develop a 13.88-acre land parcel on Pankha Road, New Delhi, into residential and commercial space and specifically asked if the proceed from the projects will be utilised for liquidation of outstanding loan amount.

A total of 158 MTNL properties across prime locations in Mumbai and Delhi have been identified for outright sale by BSNL. Additionally, 137 vacant building spaces under MTNL in the two cities are available to rent – 103 in Mumbai and 34 in Delhi.

“In case of a default of payment within the period stipulated above, the bank will be constrained to institute legal proceedings for the recovery of the said entire loan along with interest and take such other steps as may be available to the Bank including enforcement of securities without any further reference to you in the matter and entirely at your costs and consequences,” SBI said in the letter.


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