State-run Bharat Sanchar Nigam (BSNL) failed to retire a government loan of Rs 7,500 crore despite having a cash-reserve of Rs 18,829 crore as on March 2005, leading to an excess expenditure of Rs 1,089 crore on interest payment during 2005-07.
"BSNL failed to retire government loan of Rs 7,500 crore inspite of having adequate cash reserves of Rs 18,829 crore as of March 2005 parked in bank deposits with average rate of return of 6.19 to 7.38 per cent per annum against the rate of interest of 14.50 per cent for the loan, the CAG report on Telecom sector tabled in the Parliament today said.
"This imprudent financial management resulted in excess expenditure of Rs 1,089 crore on interest payment," it added.
BSNL, created in October 1, 2007, had received all assets and liabilities of the previous telecom units like Department of Telecom Services (DTS) and Department of Telecom Operations (DTO) at a provisional value of Rs 63,000 crore, including government of India loan of Rs 7,500 crore.
The loan was for a period of 15 years, with repayment of principles in equal annual installments and interest at government prevalent lending rate of 14.5 per cent.