Union Bank Halts MTNL Operations Over Unpaid Loans

Union Bank of India has frozen all accounts of the state-run telecom company MTNL due to non-payment of dues, according to a regulatory filing on Wednesday. The bank informed MTNL on August 21 about the freezing of its accounts over unpaid loans.

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Earlier this month, MTNL disclosed to stock exchanges that it had defaulted on bank loan payments amounting to Rs 422.05 crore. The company detailed that it had failed to pay Rs 155.76 crore to Union Bank of India, Rs 140.37 crore to State 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.

MTNL's Financial Struggles

The telecom firm previously raised Rs 5,573.52 crore in debt from these banks. The loss-making company has total borrowings of Rs 7,873.52 crore from banks and financial institutions, with its overall debt standing at Rs 31,944.51 crore.

MTNL has requested Rs 1,151.65 crore from the government for interest payments on sovereign guarantee bonds in the current fiscal year. Additionally, the government allocated Rs 3,668.97 crore in the Budget for repaying the principal amount of MTNL bonds.

"This is to inform you that Union Bank of India vide its Letter... dated August 21, 2024 has informed MTNL that its account has slipped to NPA with effect from August 12, 2024 due to which all accounts of MTNL with Union Bank of India have been freezed automatically," MTNL stated.

The telecom company is grappling with significant financial challenges and is seeking government assistance to manage its debts and interest payments effectively.