MTNL's Over Rs 8,500-Crore Default: Union Bank Of India To PNB — A Look At PSU Lenders' Exposure

Mahanagar Telephone Nigam Ltd. has defaulted on a staggering Rs 8,584.9 crore as of June 2025 in principal and interest payments to seven public sector banks, according to its exchange filing on Tuesday.

The disclosure underscores the deepening financial crisis at the state-run telecom operator, which has been grappling with mounting losses and unsustainable debt for over a decade.

The affected lenders and their respective exposure to MTNL are as follows:

• Union Bank of India tops the list with dues amounting to Rs 3,733.2 crore.

• Indian Overseas Bank follows with Rs 2,434.1 crore.

• Bank of India is owed Rs 1,121.1 crore.

• Punjab National Bank has exposure of Rs 474.7 crore.

• State Bank of India is owed Rs 363.4 crore.

• UCO Bank and Punjab & Sind Bank are owed Rs 273.6 crore and Rs 184.8 crore respectively.

Of the total default, Rs 1,868.6 crore comprises overdue principal.

MTNL's overall financial indebtedness now stands at Rs 34,484 crore, which includes Rs 8,585 crore in bank loans, Rs 24,071 crore in sovereign guarantee bonds, and Rs 1,828 crore in loans from the Department of Telecommunications for servicing interest on these bonds.

Notably, while the sovereign guarantee bonds are backed by the Government of India, the Rs 8,100-crore bank exposure is not covered by any government guarantee.

MTNL's Grim Performance

The company's financial year 2024 annual report paints a grim picture, admitting that MTNL's existing network has become obsolete, leaving it technologically outdated and commercially unviable in a competitive telecom market. Over the past 10 years, MTNL has reported a cumulative net loss of Rs 29,100 crore, reflecting sustained operational decline.

MTNL's total debt load is estimated at Rs 32,200 crore, out of which Rs 24,100 crore are sovereign-backed bonds with coupon rates ranging from 7% to 8.25%, placing a heavy interest burden on the company's already strained finances.

Efforts are underway by the government to revive MTNL, including a land monetisation plan aimed at raising funds through asset sales. However, progress has been slow and uncertain, and delays continue to erode the company's financial stability.