Government Steps in as MTNL Defaults on Rs.8,346 Crore Loans; High-Level Meeting Scheduled with Banks on May 16
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Mahanagar Telephone Nigam Limited (MTNL), the state-owned telecom operator, is in serious financial trouble due to mounting debt and multiple loan defaults. In response, Cabinet Secretary T.V. Somanathan has called an important meeting on May 16 with the top executives of major public sector banks to discuss possible solutions and avoid any immediate negative action against the company, according to sources familiar with the matter.
Why This Meeting Is Important
The main goal of this meeting is to prevent MTNL’s loan accounts from being classified as Non-Performing Assets (NPAs). If that happens, it would mean that the banks would have to set aside extra money (known as provisioning) to cover the bad loans, which would hurt their financial performance. Given their large exposure to MTNL, the lenders also want to avoid this situation.
Who Will Be Attending?
Apart from the Cabinet Secretary, several senior government officials are expected to attend the meeting, including:
- Ajay Seth – Secretary of Economic Affairs
- M. Nagaraju – Secretary of Financial Services
- V. Vualnam – Secretary of Expenditure
- Neeraj Mittal – Secretary of Telecommunications
MTNL’s Loan Defaults: A Deep Dive
According to a regulatory filing made by MTNL on April 19, the company has defaulted on loan repayments worth ₹8,346.24 crore. These defaults happened over a span of seven months, from August 2024 to February 2025.
Here’s a breakdown of the largest defaults:
- ₹3,633.42 crore to Union Bank of India
- ₹2,374.49 crore to Indian Overseas Bank
- ₹1,077.34 crore to Bank of India
- ₹464.26 crore to Punjab National Bank
- ₹350.05 crore to State Bank of India
- ₹266.30 crore to UCO Bank
- ₹180.3 crore to an unidentified bank
These unpaid amounts include both principal and interest components, indicating a widespread financial stress.
Total Debt and Liabilities
As of March 31, 2025, MTNL reported a total debt burden of ₹33,568 crore, showing the seriousness of its financial crisis. This includes:
- ₹8,346 crore in bank loans
- ₹24,071 crore in sovereign guarantee (SG) bonds
- ₹1,151 crore in loans from the Department of Telecommunications (DoT) to pay the interest on SG bonds
Long-Term Struggles Despite Government Support
MTNL has been facing challenges for many years, including falling revenues and high operational costs. Despite this, the government has stepped in multiple times to keep the company running. Over the years, the government has pumped in over ₹3.23 lakh crore to support MTNL and BSNL (its sister company which operates across India, except Delhi and Mumbai) through three financial revival packages.
