Bank Of India: MTNL Defaulted On Rs 1,094 Crore Loans

Mahanagar Telecom Nigam Ltd. added Rs 1,094 crore worth slippages into Bank of India's July-September quarter results. These slippages forced the lender to make provisions worth Rs 200 crore during the quarter.

Bank of India's cumulative slippages during the quarter rose to Rs 2,546 crore, higher than Rs 1,930 crore reported during the June quarter. Apart from MTNL, the bank reported Rs 702 crore agriculture loan slippages, Rs 475 crore from micro, small and medium enterprises, and Rs 211 crore from retail accounts.

"Without this, our slippages would have been lower," Rajneesh Karnatak, MD and CEO, Bank of India, told NDTV Profit in an interview. While Karnatak did not confirm the name of the public sector corporate account, a person with direct knowledge of the matter confirmed that the account is MTNL.

Previously, State Bank of India had identified the MTNL account as a non-performing asset.

MTNL has been consistently defaulting on its debt obligations over the last few months, owing to a severe cash crunch at the telecom firm. While the government has been looking at resolution for the company for some time, a clear plan is yet to emerge.

In August, MTNL informed exchanges that it had defaulted on bank loan payments worth Rs 422 crore. This includes repayments to Union Bank of India, Bank of India, Punjab & Sind Bank, Punjab National Bank and UCO Bank.

According to Karnatak, banks are in talks with the company's management for a resolution plan. Banks are hopeful of a plan emerging soon, which may involve restructuring the outstanding debt, he said.

NDTV Profit had previously reported that the government has sought details of land parcels owned by MTNL, as part of the resolution process. While the company has Rs 40,000-50,000 crore worth land parcels under its control, not all of it can be monetised to settle debt.

The company's total debt is reported to be over Rs 30,000 crore.