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Publish Date : 23-Jul-2014

The state-owned lender Canara Bank is interested to finance the monorail projects planned for the places of Thiruvanathapuram and Kozhikode in Kerala.

The bank has also signed a loan deal worth Rs 1,170 crore with the Kochi Metro Rail Limited (KMRL) here in Kochi on Sunday. The deal signing event, which took place at the KMRL office in Kochi, was joined by the CMD of Canara Bank R K Dubey, plus the MD of KMRL Elias George and the Power Minister Aryadan Mohammed.

Following the event, the Canara Bank CMD has revealed before the media that Kerala is unlikely to face any challenges to secure fund to support its development projects. Canara Bank’s loan now carries an interest rate of 10.8%, with a term of 19.5 years. The newly granted loan is one of the highest loans extended by any single bank to any metro project in the country.

The KMRL MD stated, “After the first AFD mission in April 2013, KMRL found a gap of around Rs1,000 crore in the sanctioned term loan component of Rs2,170 crore for the Kochi Metro Rail Project.

KMRL then approached various funding agencies, domestic banks and financial institutions for a term loan of Rs1,170 crore. Though we got sanctions from almost all the banks we approached, in terms of interest, tenure, cost and charges, the Canara Bank emerged to be the best.”

Elias George has further stated that the KMRL is mulling over the opportunities of securing further funding from the Banks for the Phase 1 extension to Tripunithura and the property development planned at Kakkanad considering their relaxed rules. He added, “The KMRL board will take a final decision in this regard.”

Elias George revealed that the KMRL had made the loan request on June last year. The company did negotiations with the bank on numerous occasions and settled a cost-effective deal at last, as the lender granted quite a few relaxations such as zero commitment charges and prepayment premium. All these factors facilitated KMRL to cut its project costs significantly.

KMRL MD stated, “The agreement was tailor-made for KMRL with many deviations from the banks standard format.” The Phase – 1 of the Thiruvanathapuram Monorail project entails an overall expenditure of Rs3,590 crore, with the Kozhikode project requiring another Rs1,991 crore. Previously, the Canara Bank had extended a Rs1,892 crore loan to the Kannur Airport project as well.

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