MTNL’s financial troubles deepen: Punjab and Sind Bank classifies account as non-performing asset
This classification comes as a part of a broader trend, with several banks already having labelled MTNL’s debt as non-performing, indicating severe liquidity issues for the company.
In an official communication to the stock exchange on October 17, MTNL confirmed the development, stating, “…this is to inform you that Punjab and Sind Bank (PSB) via its letter dated October 16, 2024, has informed that the accounts of MTNL have turned into NPA effective October 8, 2024.”
This classification adds to the mounting concerns surrounding MTNL’s financial stability, with major lenders such as State Bank of India, Union Bank of India, Bank of India, and Punjab National Bank having previously designated MTNL’s debt as NPAs.
The cumulative exposure of banks to MTNL stands at a staggering ₹7,925 crore. This significant amount will necessitate higher provisioning by the banks as MTNL’s financial situation continues to deteriorate.
The company had attempted to negotiate a repayment plan, proposing to settle approximately 40% of its outstanding dues, which effectively would mean a 60% haircut on the total debt. However, this proposal was rejected by its lenders in June, leaving MTNL in a precarious position.
Moreover, MTNL’s debt obligations also include ₹27,740 crore in bonds that are backed by a sovereign guarantee, which provides some insulation against the full extent of its liabilities.
Shares of Mahanagar Telephone Nigam Ltd ended at ₹50.09, down by ₹1.55, or 3.00% on the BSE.
