RBI deducts Rs 47 crore from Orissa a/c towards power bond interest

The Reserve Bank of India (RBI) has deducted Rs 46.87 crore from the Orissa government's account towards interest on power bonds floated by Grid Corporation of Orissa (Gridco) to pay the outstanding dues of National Thermal Power Corporation (NTPC).

This is the first such interest deduction at source by RBI on the power bond and this practice will continue till 2016, sources said.

The state government had issued the notification for power bonds of Rs 1102.87 crore on September 15, 2003 which securitised the outstanding dues of Gridco up to September 30, 2001.

These bonds were deemed to have been issued on October 1 2001 and carried an interest rate of 8.5 per cent per annum to be paid half yearly.

The overdue interest on these loans between October 1, 2001 and March 31, 2003 are supposed to be paid in 12 months from the date of issue of the notification. The state government has asked Gridco to pay Rs 10 crore per month from October, 2003 on account of the overdue interest.

The government has also asked Gridco to pay Rs 56.87 crore towards the interest on the power bond so that the state's plan and non-plan expenditure is not affected for servicing the bond.

Meanwhile, the cash-starved state government has got a small solace with the Centre releasing an assistance of Rs 142 crore towards ongoing externally aided projects.

"This will help the government to meet the day-to-day financial requirement of the state as well as to accelerate the pace of implementation of the projects", a government press release said.

Such was the financial crisis in the state that the government had to draw overdraft from the RBI twice in October to meet the day-to-day and other expenses.

Officials from the finance department had visited New Delhi and discussed with the senior officials to expedite release of additional Central assistance for the ongoing externally aided projects.

The government has also requested the Centre to release its share of Central taxes for November in advance to tide over the financial crisis.

In another development, the National Bank for Agriculture and Rural Development (Nabard) has announced reduction in the interest rate on loans under the Rural Infrastructure Development Fund (RIDF)-IV, V, VI, VII with effect from October 1.

Loans for these tranches were availed at an interest rate of 12, 12, 11.5 and 10.5 per cent against the prevailing rate of 8 per cent.

Following repeated requests from the state government, Nabard has reduced the interest rate to 9 per cent which is expected to ease the government's loan servicing burden to a great extend.