BENGALURU: Even as Bengaluru Metro’s Phase 2A (ORR line) and 2B (Airport line) corridors remain under construction and generate no revenue, the Bengaluru Metro Rail Corporation Limited (BMRCL) has started repaying a $500-million loan from June 1.
The repayment comes at a time when the rupee has severely depreciated against the US dollar since the loan was contracted in 2021, adding to the repayment burden.
According to data available in the latest annual report 2024-25, the repayment schedule commenced on June 1, under the loan agreement signed on August 19, 2021 with the Asian Development Bank (ADB). The Rs 3,750 crore (approx) loan carries a 25-year term, including a five-year moratorium, and will be repaid through instalments until December 1, 2045.
When the loan agreement was signed in 2021, the exchange rate was around Rs 75 per US dollar, but now the rupee is trading around Rs 95 against the dollar.
This means BMRCL is effectively paying nearly Rs 20 more for every dollar it repays compared to the time when the amount was borrowed. Both the principal and interest payments are linked to the dollar-denominated loan.
According to official data, BMRCL had drawn $335.12 million of the sanctioned $500-million loan by the end of the 2024-25 financial year, equivalent to about Rs 2,748.67 crore.
‘BMRCL loan repayments backed by state guarantees’
The ADB funding is being used for the construction of 58.19-km Phase 2A and 2B corridors connecting Central Silk Board to Kempegowda International Airport. While the project is expected to significantly improve connectivity to the airport, the commencement of loan repayment before the corridors become operational will force BMRCL to meet repayment obligations without revenue being generated from the projects.
Satya Arikutharam, an independent mobility expert, said, “The corporation’s repeated project delays have resulted in a mismatch between loan obligations and income generation. Adding to this is the sharp depreciation of the rupee against the dollar, yen and euro, making foreign loan repayments significantly costlier.”
Highlighting that the absence of a robust currency hedging policy is concerning, Arikutharam added that ultimately these financial inefficiencies are being passed on to commuters through steep fare hikes.
When TNIE contacted BMRCL, a spokesperson said, “BMRCL’s loan repayments are backed by state government guarantees, and there is a clear commitment to all repayment obligations. In the event of any revenue shortfall, the state government will provide the necessary support. Even on operational Metro corridors, passenger fare revenue alone is insufficient to meet loan repayment commitments, requiring financial assistance from the government. Loan repayments cannot be defaulted upon, and all obligations to lenders will be fulfilled as per the agreement.”