The Hindu 29.12.2010
GVMC likely to borrow from HUDCO
| Technical team holds discussion with Municipal Commissioner |
GVMC needs additional funds to meet its share in JNNURM projects
It hopes to get loan in a month at an interest rate below 9 per cent
VISAKHAPATNAM: With prolonged negotiations hitting a roadblock, the Greater Visakhapatnam Municipal Corporation (GVMC) has now taken up borrowing of Rs.100 crores from HUDCO.
The GVMC needs additional funds to meet its requirement of 30 per cent contribution for the Rs.1,800-crores worth projects it has launched under the Jawaharlal Nehru National Urban Renewal Mission.
The corporation first borrowed Rs.100 crores from LIC. It had later gone in for another Rs.100 crores from Bank of India at 8.25 per cent. Officials have begun the process of negotiating with various banks for another Rs.100 crores for which the State government has accorded approval.
RBI guidelines
But following the RBI guidelines, the banks have changed their base rates and the hardening interest rates have prolonged the process. The Bank of India lent at 8.25 per cent when the base rate was 7.75 per cent. But now, its base rate has gone up to 8.75 per cent.
Commissioner V.N. Vishnu also participated in the negotiations taken up with the Bank of Baroda in Hyderabad in October.
The prospect of rates changing again has, however, stalled the process. The corporation's banker, State Bank of Hyderabad, itself is not willing to lend at a rate lower than 10.25 per cent.
During one of his visits to New Delhi, Mr. Vishnu has taken up the issue with top HUDCO officials familiar with Visakhapatnam and its mission works. With HUDCO willing to meet the requirement, the GVMC made out an application for the loan.
Sources said a local team on Monday discussed the issue with GVMC officials. A technical team from Hyderabad, in the city on Tuesday, had discussions with Mr. Vishnu.
It was here for a physical verification of the status of projects, the guarantees it offered etc.
Fund crunch
It is hoped that the loan would materialise within a month at an interest rate below 9 per cent.
HUDCO, a fully-owned Government of India organisation, has, among its activities, JNNURM, environmental improvement of slums, social infrastructure, financing of urban development projects.
The corporation, on the other hand, has been passing through a financial crunch, what with Rs.450 crores it had spent on the urban mission works stuck with the government as it had not met the reforms timeline, particularly those relating to solid waste management and GIS-mapping of properties.
