State Bank of India Classifies MTNL Loan Accounts as Sub-Standard NPA Amid Legal Threats

State Bank of India (SBI) has categorised the loan accounts of MTNL as sub-standard non-performing assets. This decision follows the telecom company's failure to pay instalments and interest since June 30, as per a regulatory filing by MTNL. The outstanding amount on MTNL's loan account was Rs 325.52 crore as of September 30, according to SBI's letter dated October 1.

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SBI informed MTNL that its Term Loan Account Number 36726658903 was reclassified as an NPA - Sub Standard category from September 28, 2024. This change occurred due to missed payments, including both interest and instalments. Accounts in this category have been in default for less than a year but still hold potential for clearing dues.

Loan Details and Overdue Payments

The bank's letter highlighted that Rs 281.62 crore is overdue and requires immediate payment to regularise the account. SBI has also requested updates on government assurances regarding MTNL's dues. Additionally, the bank seeks details about various monetisation projects MTNL is pursuing, such as its agreement with NBCC to develop land into residential and commercial spaces.

SBI warned that it might resort to legal action if MTNL fails to meet its payment obligations. The bank stated, "...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 MTNL in the matter and entirely at your costs and consequences."

Actions by Other Banks

Other banks have also taken measures against MTNL due to unpaid dues. Punjab National Bank and Union Bank are among those involved. Union Bank of India has frozen all MTNL accounts because of non-payment issues. The telecom company, which is currently incurring losses, has total borrowings amounting to Rs 7,873.52 crore from banks and financial institutions.

MTNL's overall debt stands at Rs 31,944.51 crore. The company has requested Rs 1,151.65 crore from the government to cover interest payments arising from sovereign guarantee bonds for this fiscal year. In a separate development, the government allocated Rs 3,668.97 crore in the Budget for repaying the principal amount of MTNL bonds.

The situation highlights ongoing financial challenges faced by MTNL as it navigates its debt obligations and seeks government support for its financial commitments.