MTNL- Union Bank freezes all company accounts

Founded on April 1, 1986, Mahanagar Telephone Nigam Limited (MTNL) is a wholly-owned subsidiary of Bharat Sanchar Nigam Limited, which has its headquarters in New Delhi, India. In addition to the island nation of Mauritius in Africa, MTNL offers services in the major Indian cities of Mumbai and New Delhi.

Union Bank has frozen all MTNL company accounts:

According to a regulatory filing on Wednesday, Union Bank of India has frozen all of the accounts of the government-owned telecom provider MTNL due to non-payment of outstanding amounts. MTNL, which is heavily indebted, confirmed that the bank had previously informed the company on August 21 about the freezing of all of its accounts due to non-payment of loans.

“MTNL received notification from Union Bank of India on August 21, 2024, via letter, that as of August 12, 2024, its account has turned into a non-performing asset (NPA). As a result, all of MTNL’s accounts with Union Bank of India have been automatically frozen,” the statement from MTNL read.

MTNL default payments have increased by Rs 31,944.51 crore, as has the total amount of debts:

MTNL notified stock exchanges earlier this month that it had fallen behind on payments for a bank loan totaling Rs 422.05 crore. As per MTNL’s disclosed information, it has neglected to pay off debt amounting to Rs 155.76 crore, which includes amounts from Union Bank of India, State Bank of India, Bank of India, Punjab & Sind Bank, Rs 40.01 crore, Punjab National Bank, Rs 41.54 crore, and Rs 4.04 crore.

The telecom company had previously obtained debt from these banks totaling Rs 5,573.52 crore. The telecom company that is losing money has a total of Rs 31,944.51 crore in debt, with loans totaling Rs 7,873.52 crore from banks and other financial institutions. For the current fiscal year, MTNL has requested payment of Rs 1,151.65 crore from the government to cover interest related to sovereign guarantee bonds. In addition, the government set aside Rs 3,668.97 crore in the budget to pay the principal on the MTNL bonds.

MTNL stock declined nearly 1% in intraday: 

The share price of Mahanagar Telephone Nigam Ltd. (MTNL) is currently trading at Rs. 61.36, down nearly 1% on the day, as it continues to decline intraday. If MTNL does not issue an official statement regarding the repayment of dues from Union Bank of India, it might experience further decline later today.

Conclusion: MTNL is facing a lot of issues with loan repayment, which is concerning for the company. It is crucial for them to find a solution for the default payment to prevent the debt from further increasing.


Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.