The Hindu 12.04.2010
Corporation to take loan for JNNURM works
G.V. Prasada Sarma
| Begins negotiations with banks |
VISAKHAPATNAM: With pressing commitment towards its contribution for the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), the Greater Visakhapatnam Municipal Corporation has begun negotiations with banks and financial institutions to get Rs.200 crores as loan.
Estimated cost
The GVMC has launched works estimated at more than Rs.1,800 crores under the JNNURM under which 50 per cent of funds are granted by the Central Government. While the State government foots 20 per cent of the cost, the GVMC has to contribute 30 per cent.
The contribution of the GVMC comes to around Rs.574 crores. Officials say, so far it has contributed Rs.130 crores. For the ongoing works, there is a due of about Rs.100 crores for which the bank loan will come in handy at once.
After approvals from the Municipal Administration and Urban Development and Finance Departments, the Cabinet had given its nod to the GVMC for raising the loan. Subsequently, the GVMC officials held a meeting with bankers. Financial institutions like Hudco and ILFS also participated. The banks sought 10 days of time to come back with their proposals, it was learnt.
While one bank offered the loan at 9 per cent interest, financial institutions quoted an interest rate of 11.25 per cent. “Besides competitive interest rate, we will weigh their terms and conditions, including repayment options,” said an official. The process was expected to be completed by the month-end enabling the corporation to get the funds.
The corporation will not draw the entire amount but will be taking it whenever the need arises, thereby restricting the interest burden, explains the official.
LIC bonds
To fund its contribution, the GVMC had already raised Rs.70 crores from the LIC in the form of bonds about one and a half years ago. It is now paying the interest on the bonds and the repayment for the principal begins from the fifth to the eight year.
