Mahanagar Telephone Nigam Ltd (MTNL), the state-run telecom firm, is facing a fresh financial crisis as it defaults on a significant sum of Rs 8,585 crore in principal and interest payments to a group of seven public sector banks. The default was officially confirmed by MTNL in a filing to stock exchanges, highlighting the ongoing struggles of the company. The unpaid debt includes Rs 7,794.34 crore in principal and Rs 790.59 crore in interest.

The public sector banks affected by the missed payments include major lenders such as Union Bank of India, Indian Overseas Bank, Bank of India, Punjab National Bank, State Bank of India, UCO Bank, and Punjab & Sind Bank. The defaults piled up between August 2024 and February 2025, with Union Bank of India bearing the largest amount owed, a staggering Rs 3,733.22 crore, followed by Indian Overseas Bank at Rs 2,434.13 crore.

MTNL’s shares plunged by 4.80%, closing at Rs 49.59 after the news broke, shedding Rs 2.50 in value during the trading day. This default comes at a time when MTNL is already grappling with an enormous debt burden, which now totals approximately Rs 34,484 crore. The debt comprises bank loans, sovereign-guaranteed bonds valued at Rs 24,071 crore, and Rs 1,828 crore borrowed from the Department of Telecommunications to pay interest on these bonds.

MTNL, which has been struggling with mounting debt for years, faces a difficult path ahead. Despite receiving financial support from the government, the company’s continuing debt crisis and declining revenues underline the significant challenges it faces in returning to profitability. The latest default on loan payments marks another setback for the loss-making telecom PSU, raising concerns about its future in an increasingly competitive telecom market.