BOI Books Loss After MTNL Loan Default

12 Nov 2024 , 03:31 PM

Following MTNL’s failure to repay a Rs 1,000 crore loan, Bank of India set aside Rs 200 crore, which had an effect on the bank’s financial results for the second quarter.

TOI reported, the bank had to make larger provisions due to default on a Rs 1,000 crore loan account to a public telecom company, named as MTNL, according to MD & CEO Rajneesh Karnatak.

The government-owned telecom provider MTNL has been having financial difficulties. Bank of India deemed the loan high-risk due to the recent default, necessitating the provision. In the past, State Bank of India had classified its loans to MTNL as “sub-standard.”

Bank of India recorded a net profit of Rs 2,374 crore for Q2FY25, a 63% increase over the same time the previous year, despite the provision.

Due to its declining revenue, MTNL recorded a loss of Rs 3,303 crore in FY24. The business has found it difficult to adjust to the evolving telecom environment and the growing demand for cellular services.

MTNL revealed in August that it had not repaid bank loans totalling Rs 422.05 crore, which included Rs 93.3 crore in interest due for June and July and Rs 328.75 crore in delayed principle installments.

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