Taking a leaf from chief minister Siddaramaiah’s style of finance management, the fund-crunched BBMP is opting for debt swapping to tide over the fiscal crisis.
A senior official told Express that the BBMP is working on closing its loan accounts from different banks by taking fresh loans from Housing and Urban Development Corporation Limited (HUDCO).
“We hope that swapping of loans will help to save around Rs 20 crore a year in loan repayments,” the official said.
The BBMP has loans from different banks, including Canara Bank, Syndicate Bank, Corporation Bank and Vijaya Bank. Rate of interest on the loan taken from these banks varies between 10.75 per cent and 12.25 per cent, while HUDCO gives loan at 10.5 per cent. To take fresh loans from HUDCO, the civic body is likely to pledge some of its properties.
As on June 2013, the BBMP has to pay `2,860.88 crore. While it owes Rs 1,510.14 crore to banks, it has to pay the remaining Rs 1,350.74 to HUDCO itself.
The BBMP had taken a loan of Rs 1,500 crore from HUDCO, by pledging K R Market, Public Utility Building (PUB) and Jayanagar Shopping Complex in 2012. The then BBMP Commissioner, M K Shankarlinge Gowda, had said the corporation might have to pledge more properties to avail loans.
V P Baligar, chairman and managing director, HUDCO, told Express that they do not have any problem in giving further loans to the BBMP. “The corporation is repaying loan amount on time. They were never defaulters. We do not have problem in giving loans,” he added.
“The loan amount will be decided based on the paying capacity of the BBMP. We will check their revenue generation, including property tax. Once the BBMP sends the proposal, it will come before the board for approval,” he said.
“We will look for State government guarantee or the immovable properties of the civic body that can be mortgaged,” he added.
According to the BBMP official, Rs 61 crore is going to banks and HUDCO as interest every month.