Banks to loan Rs 15 B for Bengal infrastructure

Friday, 31 January 2003, 08:00 Hrs
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KOLKATA: A consortium of 18 banks is giving West Bengal a 15 billion soft loan over the next two years to develop the state's infrastructure.

The State Bank of India (SBI) Capital Market Limited is the "lead arranger" of the loan that the government will have to repay at an annual interest rate of 9.6 percent by 10 years, industry ministry sources here said.

SBI Capital Market Limited chairman D.P. Roy told reporters that the loan would be used to build roads, power lines, waterways and other infrastructure facilities.

He said this was the biggest amount banks had forwarded to any state government.

The state government, which collects a levy of about 200 million on petrol, diesel and cooking gas every month, will have to deposit the amount in an "accrue" account from where the banks will deduct their monthly instalments.

The banks will also keep a strict eye on the loan usage, and the state government will have to submit a report every three months.

The state has already negotiated 10 billion from the Asian Development Bank (ADB) for an ambitious project to build the state's longest highway, the 800-km long North-South Corridor, which proposes to connect the state tip-to-tip.

ADB officials are now preparing reports on the progress of work, on the basis of which the loan amount will be sanctioned in a phased manner.

The construction of the highway, to be completed by 2006, is important for business, as there are no good roads to aid fast transportation of goods from the state's northern parts to the south, where the ports are located.

The state also hopes to float public bonds worth 2 billion through the Kolkata Metropolitan Development Authority (KMDA) to raise resources for developing the state's weak infrastructure.

The money raised will be spent on developing roads in the Kolkata metropolitan area. Money for developing the infrastructure in other parts of the state will also be raised through similar bonds to be floated by other nodal development agencies.

The government says the decision to float public bonds was taken after it was noted that financial allocation from the central government for infrastructure development was decreasing every year.
Source: IANS
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