This government company defaults on massive loan of Rs..., here's what Modi govt is doing

The Indian central government, led by PM Modi, has taken a significant step to rescue the historic Mahanagar Telephone Nigam Limited (MTNL) from bankruptcy. MTNL has been continuously defaulting on loans, even after receiving a bailout package from the government.

Recent reports indicate that a meeting will be held with government banks on May 16, chaired by Cabinet Secretary TV Somanathan, to determine that MTNL's accounts will not be declared as Non-Performing Assets (NPA) despite loan defaults. This meeting is crucial for discussing how the government plans to prevent MTNL from going bankrupt and ensuring its financial stability.

MTNL defaults on over Rs 8,300 crore loan repayments

MTNL reported in April that it had defaulted on loan repayments exceeding Rs 8,300 crore to several banks, according to a report by news agency IANS.

In a stock exchange filing, the telecom company revealed that it had failed to repay its dues to multiple public sector banks, including Union Bank of India, Bank of India, Punjab National Bank, State Bank of India, UCO Bank, Punjab and Sind Bank, and Indian Overseas Bank.

What MTNL said?

The filing further disclosed that MTNL had defaulted on both principal and interest payments in March 2025. The outstanding principal amount stands at Rs 7,794.34 crore, while the overdue interest amounts to Rs 551.90 crore. This revelation highlights the significant financial challenges faced by MTNL, a government-owned telecom company, in meeting its loan repayment obligations to various banks. The default on such a massive scale raises concerns about the company's financial health and its ability to recover from this situation. The government's intervention may be crucial in resolving this issue and ensuring the stability of MTNL's operations.

“The total outstanding principal amount stands at Rs 7,794.34 crore, while the interest due is Rs 482.97 crore,” MTNL said in its filing.

The filing provided a detailed breakdown of the defaults, outlining the specific amounts owed to each lender. Union Bank of India is the largest creditor, with MTNL owing over Rs 3,633 crore. Indian Overseas Bank is owed Rs 2,374 crore, and Bank of India is owed Rs 1,077 crore.