Govt Moves To Shield MTNL From NPA Tag Amid Rs 8,346 Crore Loan Default
A high-level meeting has been scheduled for May 16 under the chairmanship of Cabinet Secretary TV Somanathan to decide the immediate fate of MTNL's debt-laden balance sheet
In a renewed bid to stave off the financial collapse of state-owned telecom operator Mahanagar Telephone Nigam Limited (MTNL), the Centre has moved to prevent its ballooning defaults from triggering a full-blown banking crisis. A high-level meeting has been scheduled for Friday, May 16, under the chairmanship of Cabinet Secretary TV Somanathan to decide the immediate fate of MTNL's debt-laden balance sheet.
Senior government officials including Economic Affairs Secretary Ajay Seth, Financial Services Secretary M Nagaraju, Expenditure Secretary V Vualnam and Telecom Secretary Neeraj Mittal, will sit down with chiefs of major public sector banks to discuss a path forward. The core agenda of the meeting is to ensure MTNL's defaults, despite being substantial, do not lead to the company being formally classified as a non-performing asset (NPA).
The meeting comes in the wake of MTNL's regulatory filing on April 19, in which it disclosed a massive loan default of Rs 8,346 crore between August 2024 and February 2025 – money borrowed from seven state-run banks. The company, once a flagship in the telecom sector, now finds itself on life support, weighed down by a total debt burden of Rs 33,568 crore as of March 31, 2025.
According to filings, the largest chunk of the default – Rs 3,633.42 crore – is owed to Union Bank of India. Indian Overseas Bank follows with unpaid dues of Rs 2,374.49 crore. Bank of India is short Rs 1,077.34 crore, while Punjab National Bank, State Bank of India, and UCO Bank are awaiting payments of Rs 464.26 crore, Rs 350.05 crore, and Rs 180.3 crore respectively. All of these include missed interest and principal payments.
Government insiders suggest the May 16 meeting is likely to result in instructions to lenders not to classify MTNL's account as an NPA – at least for now – in order to avoid setting off alarm bells across the financial system. The move is seen as part of a broader effort to prevent further exposure risks and delay formal insolvency proceedings, even as the company remains in deep financial distress.
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May 13, 2025, 15:46 IST
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