MUMBAI: State-owned telecom company MTNL has defaulted on its Rs 1,000-crore loan to Bank of India, compelling the lender to make a Rs 200-crore provision in its financials for the second quarter of FY25.
Earlier, SBI had declared loans to MTNL as sub-standard, requiring a provision. According to lenders, chances of recovery in the loan are high given that it is a govt-owned company and the Centre has provided guarantees to some of the borrowings by way of bonds.
Announcing the results for Q2FY25, Bank of India MD & CEO Rajneesh Karnatak said that the bank had to make higher provisions because of default on a Rs 1,000 crore loan account to a public sector telecom firm, which sources identified as MTNL. Despite the provision, Bank of India reported a net profit of Rs 2,374 crore, up 63% from the year-ago period.
MTNL had reported a loss of Rs 3,303 crore in FY24 as revenues slid further. Govt has been looking at various exit routes for the one-time telecom giant, which failed to prepare itself for the inevitable obsolescence of wired telephone lines as the cost of cellular services plunged.
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