**Lenders’ Plans to Acquire MTNL Properties Hit Roadblocks**
Lenders’ efforts to acquire properties from the financially troubled telecom operator MTNL have encountered significant obstacles due to restrictions on asset sales and land-use regulations. According to sources familiar with the situation, banks had proposed purchasing some of MTNL’s properties to offset outstanding dues, but the telecom company did not accept the offer. A banker involved in the discussions noted, “We could have adjusted it against the dues if the proposal was approved.”
MTNL has the potential to generate approximately ₹5,000 crore by divesting its land and property assets, which could help it repay more than half of its outstanding bank loans. As of June 30, MTNL owed banks ₹8,585 crore, with total liabilities exceeding ₹33,000 crore. While the government permits asset sales without auctions to central government organizations, state entities, and public sector banks, it does not allow banks to directly settle debts through property purchases.
Moreover, many of MTNL’s properties, especially those in Mumbai, were allocated by the government for specific public or operational purposes, such as establishing telecom infrastructure. These restrictions complicate the sale or transfer of such land to other entities, as any change in ownership or usage would likely require extensive government approvals, making the process lengthy and complex.
Discussions regarding the monetization of MTNL’s properties are still ongoing, with the matter currently under the purview of the central government. A second banker expressed optimism for a resolution, stating, “We are hopeful since it is a sovereign entity. However, banks cannot act as custodians of land and property.”
Recently, a committee of secretaries approved a plan allowing both Bharat Sanchar Nigam Ltd (BSNL) and MTNL to transfer their immovable assets—land and buildings—without auction to the central government, state governments, and public sector banks. However, any proceeds from these sales will first go to MTNL, with no provision for loan adjustments through asset takeovers. A government official mentioned that banks were asked to consider waiving 40% of the loans, but they only agreed to a 10% reduction, with decisions still pending.
Under the new guidelines, government organizations interested in acquiring MTNL’s properties must pay 2% of the property value as upfront security. If multiple agencies express interest in an asset, preference will be given to central government organizations. These entities have a 90-day window to indicate their interest; otherwise, the assets will be auctioned.
In summary, while there are potential avenues for MTNL to monetize its assets, regulatory hurdles and the need for government approvals continue to impede progress, leaving lenders and the telecom operator in a challenging position.
**FAQ**
**Q: What challenges are lenders facing in acquiring MTNL properties?**
A: Lenders are facing challenges due to restrictions on asset sales, land-use regulations, and the need for government approvals, which complicate the acquisition process.
