Sunday, November 24

BoI makes provision for MTNL's ₹1K cr default

Bank of India has set aside Rs 200 crore after MTNL failed to repay a Rs 1,000 crore loan, impacting the bank's second quarter financial results.MD & CEO Rajneesh Karnatak said that the bank had to make higher provisions because of default on a Rs 1,000 crore loan account to a public sector telecom firm, which is being identified as MTNL, TOI reported. MTNL, a government-owned telecom company, has been struggling financially. This recent default led Bank of India to classify the loan as high-risk, requiring the provision. State Bank of India had previously categorized their loans to MTNL as "sub-standard."Despite the provision, Bank of India reported a net profit of Rs 2,374 crore for Q2FY25, a 63 per cent increase from the same period last year. MTNL reported a loss of Rs 3,303 crore in FY24 as revenue continues to decline. The company has struggled to adapt to the changing telecom landscape and the increasing popularity of cellular services.In August, MTNL disclosed that it had failed to pay back bank loans totaling Rs 422.05 crore, which includes Rs 328.75 crore of unpaid principal installments and Rs 93.3 crore of interest owed for June and July.The company had disclosed it missed payments to several banks: 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 had previously borrowed a total of Rs 5,573.52 crore from these banks.Currently, the company's total debt stands at a substantial Rs 31,944.51 crore, including Rs 7,873.52 crore owed to various banks and financial institutions. MTNL has requested Rs 1,151.65 crore from the government to cover interest payments on sovereign guarantee bonds for this fiscal year. The Indian government, actively seeking solutions for MTNL, has explored various options for the struggling telecom company.
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