Mumbai: State-run telecom company Mahanagar Telephone Nigam Ltd (MTNL) has reported that its bank loan default reached Rs 8,659 crore at the end of July 2025, according to a regulatory filing.
The company owes large sums to several banks, with the biggest defaults being Rs 3,768 crore to Union Bank of India, Rs 2,455 crore to Indian Overseas Bank, and Rs 1,131 crore to Bank of India. Smaller defaults were also reported to Punjab National Bank (Rs 478 crore), State Bank of India (Rs 363 crore), UCO Bank (Rs 276 crore) and Punjab & Sind Bank (Rs 186 crore).
The defaults happened between August 2024 and February 2025.
Overall debt burden
MTNL’s total debt has now touched a massive Rs 34,577 crore. This includes:
- Rs 8,659 crore of bank loans,
- Rs 24,071 crore of sovereign guarantee bonds, and
- Rs 1,921 crore loan taken for paying interest on those bonds.
At the end of March 2025, MTNL had already reported a bank loan default of Rs 8,346 crore, which has now grown further.
Trouble with bond payments
Adding to its troubles, MTNL also recently failed to pay interest on its Bond Series VIIIB, due on 24 August 2025. The bond carries an interest rate of 7.61 percent.
As per its agreement with the Department of Telecommunications (DoT) and Beacon Trusteeship Ltd, MTNL is required to deposit enough money in an escrow account with Bank of India 10 days before the due date. However, it could not do so this time.
Government backing crucial
Despite these payment failures, MTNL has said that all of its bonds are sovereign-guaranteed, meaning the Government of India is legally obliged to cover the payments if the company cannot.
This assurance provides some comfort to investors, but the rising defaults highlight the deep financial stress faced by the state-owned telecom operator.
