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To deal with its financial problems, the Bengaluru Metropolitan Transport Corporation (BMTC) has taken a loan from Punjab National Bank (PNB). Earlier, BMTC had asked the government for permission to borrow ₹2,000 crore from different financial institutions. This money was needed mainly to pay for two things — the Employee Provident Fund (EPF) dues and fuel bills.
The government approved BMTC’s request, allowing it to raise funds to clear its pending payments. On February 6, BMTC officially invited banks to offer loans and asked for ₹589.20 crore. Among the offers, PNB agreed to give the loan at an annual interest rate of 7.58%, which BMTC found favorable.
Not just BMTC, even the Karnataka State Road Transport Corporation (KSRTC) was allowed to raise money. In total, ₹2,000 crore was to be collected by different transport corporations in Karnataka:
- KSRTC was allotted ₹623.80 crore,
- BMTC got ₹589.20 crore,
- North Karnataka Road Transport Corporation was given ₹646 crore,
- Kalyana Karnataka Road Transport Corporation received ₹141 crore.
When BMTC first invited loan offers, both nationalized and private banks showed interest. Canara Bank also submitted an offer, but their interest rate was higher at 10% per year. Since PNB’s offer was lower at 7.58%, BMTC decided to take the loan from PNB.
Loan Terms and Conditions:
- The loan must be given to BMTC all at once (in a single payment).
- BMTC will have seven years to repay the loan.
- The state government will guarantee the loan by providing primary and collateral security.
How BMTC Will Use the Loan:
BMTC needs to pay over ₹400 crore for its employees’ provident fund (EPF) and about ₹180 crore for fuel costs. The ₹589.20 crore loan from PNB will mainly be used to pay off these debts. This way, BMTC will be able to ensure that employee benefits are provided on time and that fuel suppliers are paid without delays.
BMTC officials also said that the loan will be repaid from the income they earn from running the transport services.
