Japanese fillip: Rs 1,600-cr loan for Metro

FINALLY ON TRACK?
Japanese fillip: Rs 1,600-cr loan for Metro
Low-Interest Deal Struck; BMRC To Get 10-yr Moratorium
The Times of India

Bangalore: The Japan Bank of International Cooperation (JBIC) will provide a Rs 1,600-crore low-interest loan to Bangalore Metro Rail, providing the project a much-needed impetus. This follows an understanding between the governments of Japan and India on funding 10 projects in the country.

Bangalore Metro Rail Corporation (BMRC) MD K N Shrivastava said the Bangalore Metro Rail project was listed among the 10 to be funded by the Japanese government. The JBIC loan will carry a 3.5% interest.

A Japanese delegation met Karnataka CM N Dharam Singh on Tuesday and discussed the issue. The JBIC loan will be a government-to-government affair, Shrivastava said. Of the Rs 3,000 crore to be raised through loan for the Rs 5,800-crore project, the balance of Rs 1,400 crore will be raised from banks in India through UTI Bank, the lead fund arrangers. The remaining Rs 2,800 crore will be equally contributed by the Karnataka and central governments.

For the JBIC loan, UTI Bank will help the BMRC to get a ‘forward cover’ for 40 years. JBIC will give BMRC a 10-year moratorium; the repayment period of 30 years will begin after that. Any fluctuation in foreign-exchange rates is being met through a forward cover. Hence, the costs will be kept under control.

The forward cover will be provided by Barclays Capital, an American bank, at 3.4%. “The landed cost for BMRC will be 4.7% against the otherwise 9% interest rate the BMRC would have borne if it had gone for an all-out loan with banks in India,’’ Shrivastava explained.

The JBIC had four missions to Bangalore before the arrangement was finalised after the appraisal. “The final approval has come.’’ The loan amount will be sanctioned in February. A loan agreement will be signed between the governments of India and Japan in March.

The Cabinet Committee on Economic Affairs is meeting in New Delhi next week to give the much-awaited final nod to the Metro Rail project. “All formalities are being completed,’’ Shrivastava said.