BMTC, KSRTC to raise loans to pay PF and other dues
Cash-strapped road transport corporations that sustained huge losses this year after the outbreak of COVID-19 and recently saw employees stage a four-day strike, are now planning to borrow from banks to pay provident fund dues of employees and meet other working capital.
The Bangalore Metropolitan Transport Corporation (BMTC) has approached banks to raise a loan of ₹230 crore to pay PF dues, gratuity etc., while the Karnataka State Road Transport Corporation (KSRTC) has floated tenders seeking ₹150 crore loan towards working capital and partially to pay employees’ PF. The corporations will mortgage buses or other property to raise loans.
BMTC has outstanding due of ₹320 crore towards payment of employee PF. Managing director C. Shikha said: “We planned to borrow before the outbreak of COVID-19 to make payments towards outstanding PFs, as payment delays attract high interests. Loan repayment will be done on a quarterly basis. Like in previous times, we will mortgage buses as per the terms and conditions of the banks.”
She also maintained that the BMTC has improved its credit ratings and hopes for a reduction of interest rates charged by banks. In the previous fiscal, the BMTC had borrowed loans to induct 350-odd new diesel buses. However, for this financial year, citing poor finances and directions from the State government, the BMTC has decided not to procure new buses. However, it plans to induct and operate 2,000 new buses in the next fiscal, including 500 electric buses on a lease basis.
Shivyogi C. Kalasad, MD of KSRTC, said due to COVID-19, the corporation has suffered over ₹1,500 crore revenue loss and can meet operational expenses that include fuel cost, maintenance and others, by borrowing ₹150 crore in the first phase and ₹100 crore later.
“Compared to other corporations, our PF dues are not as high. However, due to huge revenue loss there is shortfall in money required for operational expenses. We are yet to recover from losses induced by the pandemic. At this stage, it is very difficult to predict when everything will be normal,” said the official.
In November, while requesting the State government to release funds to pay staff salaries, all four corporations had said that they require ₹2,234.92 crore for pending fuel purchase cost, PF, benefits of retired employees, and others.
As of September, the corporations had cumulatively borrowed ₹1,569.33 crore from banks and financial institutions.