The Hindu 21.08.2013
Civic body seeks to raise Rs.10-cr. loan
The Kochi Corporation will seek the State government’s permission for raising a Rs.10-crore loan. Mayor Tony Chammany will move the application on Wednesday.
Mr. Chammany is expected to meet State government representatives in Thiruvananthapuram during a meeting of the State-level Empowered Committee on Jawaharlal Nehru National Urban Renewal Mission on Wednesday.
Syndicate Bank, which has extended a loan of Rs. 5 crore on two occasions, is ready to fund the corporation again. All that they need is an assurance from the corporation that it will repay the loan amount and the clearance of the State government. Earlier, the State government had allowed the civic body to raise loans in this manner, said Mr. Chammany.
The civic body decided to go in for a loan as the State government went back on its promise to reimburse the pension amount paid by the corporation to some of the State government employees. The State government had offered to pay Rs. 10 crore from the Rs. 38 crore due to the civic body. The delayed payment affected the financial situation of the civic body, he said.
The corporation will create an escrow account for repaying the overdraft from the bank. A fixed amount will be credited to this account daily and top priority will be given for the payment to this account. The corporation had not defaulted even once the payment to the bank when it raised the loans earlier. It was on the basis of the repayment track record that the bank has offered a fresh loan to the corporation, he said.
Reduced resources and mounting arrears have forced the civic body into a deep financial crisis. Contractors of the corporation have threatened to boycott civil works as it could not clear their bills as promised earlier. A portion of the funds raised as overdraft will be used to partly clear the arrears of the contractors.
Reduced resources and mounting arrears have forced the Kochi Corporation into a deep financial crisis.
