Under financial stress, BMTC puts out ad for Rs 160 crore loan
It wants funds to settle PF, insurance premium and gratuity of employees.
The BMTC is under financial distress and under pressure to settle provident fund (PF), insurance premium and gratuity of employees.
In the advertisement published in four prominent newspapers in the city on June 13, the transport utility reveals that it has received permission from the state government to avail the loan. “The BMTC would like to know the best offer for availing the term loan of Rs 160 crore to pay off its dues,” the advertisement reads. The utility intends to raise the loan from nationalised or scheduled commercial banks.
BMTC chairman NA Haris said the BMTC followed a transparent process to raise the loan and suggested that it should be followed by every public service utility. “Instead of talking to banks individually, we decided to advertise. We need money. And we hope the banks will come forward with an offer to provide a loan with lesser interest rates,” he said.
The ad also makes the terms and conditions clear: the proposed loan amount will be drawn in one go. The tenure shall be for seven years. The repayment would start after a moratorium period of a minimum of two months. The loan should also be without any upfront fee and documentation charges, BMTC specifies in the ad.
Termed an “expression of interest,” the ad specifies that the banks are given seven days to participate in the bids. BMTC managing director NV Prasad said the loan would help the corporation settle provident fund dues.
As on Wednesday, the corporation has apparently received applications from “quite a few” banks, a source said without specifying the number. The final number of banks will be revealed on the last date to submit the bids (Thursday).
Currently, the BMTC has an accumulated debt of over Rs 1,000 crore. It has also raised a loan of Rs 329 crore from several nationalised banks over the last five years, shows data collected by activist Yogesh Gowda through the Right to Information (RTI) Act.
HV Ananth Subbarao, general secretary of the 44-year-old KSRTC Staff and Workers’ Federation was surprised to know of the advertisement. “When the metro is being offered Rs 36,000 crore, it’s sad that the state government is hesitating to support BMTC with a subsidy of at least Rs 2,000 crore,” he said. The BMTC owes Rs 300 crore to employees, including gratuity, provident fund and payment of insurance premium. “We are planning to hold a protest next week, seeking financial assistance from the state government,” he said.