Lenders may designate MTNL as a non-performing asset
By MYBRANDBOOK
Banks have not been kind to Mahanagar Telephone Nigam Limited (MTNL), which has fallen behind on loan payments and is now requesting a large haircut from state-owned lenders. For the majority of its lenders, the MTNL account is anticipated to fall into the non-performing asset (NPA) category in the July–September quarter due to past-due loan repayments.
Union Bank of India and Bank of India have already classified MTNL’s debt as an NPA, and other banks, including State Bank of India (SBI), UCO Bank, Punjab National Bank (PNB), and Punjab & Sind Bank are likely to follow suit in the coming weeks, it is understood.
MTNL had proposed a repayment plan offering to settle approximately 40% of its outstanding dues, indicating a 60% haircut, which was rejected by its lenders in June.
Lenders have signalled a willingness to explore restructuring options, even a debt-to-equity conversion, but they have firmly ruled out the possibility of accepting a haircut.
“Such a big haircut from a government-owned company is unacceptable. We are open to resolution and will consider all options, but we cannot accept a haircut. We have asked MTNL to come up with a plan and lenders will consider it. There have also been back-channel talks with the government that a haircut on this account will send a bad signal, so we need to see what is done now,” said a banking executive from a large public bank with exposure to the company.
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