New Delhi, July 25 -- Debt-laden Mahanagar Telephone Nigam Ltd (MTNL) that sits on a land goldmine in metros faces trouble selling it to settle dues, frustrating banks awaiting dues of over Rs.8,500 crore.

Lenders' plans to buy property from the defaulting telco and adjust it against dues have stalled due to curbs on the sale of these assets and land-usage norms, two people aware of the development said.

"Banks proposed to buy some of the properties of MTNL, but they did not agree. We could have adjusted it against the dues if the proposal was cleared," said a banker aware of the discussions.

The banker said MTNL can monetize about Rs.5,000 crore if it divests its land and property holdings, allowing it to repay more than half of its o...