Union Bank freezes accounts of telecom firm MTNL over non-payment of dues

Union Bank of India has frozen all accounts of state-run telecom company MTNL for non-payment of dues, a regulatory filing said on Wednesday.

Union Bank of India informed the company on August 21 about freezing of all its accounts over non-payment of loans, debt-ridden MTNL said.

"This is to inform you that Union Bank of India vide its Letter... dated August 21, 2024 has informed MTNL that its account has slipped to NPA with effect from August 12, 2024 due to which all accounts of MTNL with Union Bank of India have been freezed automatically," MTNL said.

Earlier this month, MTNL informed stock exchanges that it has defaulted on bank loan payments worth Rs 422.05 crore.

According to the details shared by MTNL, it has defaulted on the payment of Rs 155.76 crore on debt raised from Union Bank of India, Rs 140.37 crore from State Bank of India, Rs 40.33 crore from Bank of India, Rs 40.01 crore from Punjab & Sind Bank, Rs 41.54 crore from Punjab National Bank, and Rs 4.04 crore from UCO Bank.

The telecom firm earlier raised Rs 5,573.52 crore in debt from these banks.

The loss-making telecom firm has total borrowings of Rs 7,873.52 crore from banks and financial institutions, and the total debt of the company stands at Rs 31,944.51 crore.

MTNL has sought Rs 1,151.65 crore from the government for payment of interest arising out of sovereign guarantee bonds in the current fiscal year.

Separately, the government, in the Budget, allocated Rs 3,668.97 crore for the payment of the principal amount of MTNL bonds.