FAM and the Kelantan Football Association (KAFA) are said to be still in discussions over the issue.
FAM deputy president Datuk Afandi Hamzah said the FAM has yet to make a decision.
"So far, no decision has been made as to whether Kelantan will be relegated to the Premier League from the Super League or dropped from the M-League because discussions are still going on.
"KAFA have taken several initiatives to settle the salary issue," he told reporters after launching the Bank Islam Kelantan FA The Red Warriors Debit-
Media reports had emerged that Football Malaysia Limited Liability Partnership (FMLLP) chief executive officer Kevin Ramalingam had allegedly proposed that the FAM deduct points from KAFA if the association failed to settle the outstanding wages of players before May 31.
KAFA has yet to settle the outstanding wages of five former players, Amiridzwan Taj, Nazri Ahmad, Fitri Omar, Amar Rohidan and Fakri Saarani.
FMLLP is a private entity which started managing the M-League