Reliance Communications (RCOM) is the biggest loser in telecom. It has shed 97% of its value from its peak in January, 2008. Its shares closed at Rs 20.80 at NSE, on Monday. Its market capitalisation was Rs 5,137 crore. It means that it has lost 97% of its value from its peak in 2008 when its market capitalisation was Rs 1,65,917 crore.

Immediate reason for fall in its share price is that the company is facing NPA tag as it has defaulted in loan payments to banks. There was a sharp decline in its revenues and it reported a loss of over Rs 900 crore, thanks to the entry of Reliance Jio.

When the company was struggling to come out of its debt, Reliance Jio’s entry increased its problems. It may be noted that in 2008, when its value was at its peak, there was a difference of only 1.3% between the market cap of RCOM and Bharti Airtel.

Today’s problem for RCOM started with a news report in the Economic Times that it had defaulted on its loan servicing obligations with more than 10 local banks.

The ET report has said that loans to the telecom operator have been flagged as “either SMA1 or SMA2” by at least 10 Indian lenders.

Loans are classified as ‘SMA’ when the interest payment from the borrower has been unpaid for a certain amount of days: if a loan hasn’t been serviced for 30 days after falling due, it’s categorised as SMA 1 and if unpaid for 60 days or more, the banks call it SMA 2.

A loan is only officially classified as a non-performing asset (NPA), which is when the bank officially has to set aside money to provide for the loan, if interest is unpaid for 90 days.

For Reliance Communications, a few banks will be forced to “treat the account as an NPA after a fortnight”, said ET report.

Earlier, the company posted a consolidated loss of Rs 966 crore for the fiscal ended fourth quarter compared to a net profit of Rs 90 crore in the same period last year. Total income for the company in the fourth quarter of FY17 was Rs 4524 crore compared to Rs 5,980 crore when compared on a like to like basis.