BMC courts row over rules for loan
LOAN WORTH Rs 5 crore on higher interest rate from a private bank without inviting offers from other banks in violation of rules has landed the Bhopal Municipal Corporation (BMC) in a controversy.india Updated: Oct 31, 2006 15:34 IST
LOAN WORTH Rs 5 crore on higher interest rate from a private bank without inviting offers from other banks in violation of rules has landed the Bhopal Municipal Corporation (BMC) in a controversy.
Surprisingly, the State Government gave its approval to the transaction by seemingly overlooking the irregularity. The loan for the MP Nagar Development Project may turn out to be an albatross around the BMC neck as the corporation has not been able to generate the 30 per cent funds from public participation.
To add to the corporation troubles, the BMC is finding it hard to answer a Vidhan Sabha question asked by Bhopal North MLA Arif Aqueel in this regard.
The BMC had prepared a development project for the MP Nagar Zone-II about one and half years back on the directives of the then chief minister Babulal Gaur. It was decided then that Rs one crore of the project cost would be collected through public participation.
The BMC also decided to take loan worth Rs five crore from a private bank – IDBI Bank. For the loan, the BMC mortgaged all the property tax accounts of ward 47 as the guarantee. The corporation has been withdrawing loan money as the work progresses.
In a hurry to get going with the project, the BMC authorities selected the bank without inviting the offers. About one and half year back, most nationalised banks were offering different types of loan at an interest rate of 8.25 per cent to 9 per cent.
However, the BMC decided to take the loan at the interest rate of 10.25 percent from IDBI Bank while the prime landing rate was fixed at 9 per cent. Moreover, the loan was taken at the floating rate instead of fixed rate of interest. Due to this reason, the BMC has now been repaying the loan amount to IDBI Bank at a rate of 11.25 per cent.
On the other hand, the Housing and Urban Development Corporation (HUDCO) provided the loan for Bairagarh Augmentation Scheme, Transport Nagar Scheme and Kolar Augmentation Scheme-II at an interest rate of 8.5-9 per cent. When asked, Mayor Sunil Sood said he would look into the matter and take the decision in the best interest of the BMC.