K'taka RTCs seek to raise loan to meet liabilities

Cash-strapped RTCs seek to raise loan to meet liabilities

Representative image. Credit: DH Photo

Increasing financial stress has forced the four road transport corporations (RTCs) to seek loans from banks and multilateral agencies to meet the employee expenditure, especially to fulfill the provident fund (PF) deposits, at a time the pandemic has eroded their revenue generation.

The Bangalore Metropolitan Transport Corporation (BMTC) and Karnataka State Road Transport Corporation (KSRTC) have already issued request for proposal notification seeking to raise Rs 230 crore and Rs 120 crore, respectively. Covid-19 has already pinned the corporations to a corner to an extent that they sought government aid to pay salaries over the last nine months.

BMTC Managing Director C Shikha said Rs 230 crore was meant to clear old liabilities, including the PF, where we end up paying 12% or 13% high interest. “The government has helped in funding 50% of the employee salaries. We still have to raise the remaining amount from internal resources. We hope that the increasing trend in our ridership will help us in the coming days,” she said.

The corporation, however, hopes that the trend of the rising ridership on its buses continues in the coming days. From 2 lakh daily riders in the initial months of the lockdown, the ridership has come close to 19 lakh. “It’s a positive sign. But there is still the large gap of 15 lakh between the pre-pandemic daily ridership (over 35 lakh),” she added.

The KSRTC, which had posted cumulative losses of Rs 311 crore last year, is also raising Rs 120 crore as the revenue generated by the corporation’s services are falling short of meeting the operation expenditure. 

Principal Secretary, Transport Department, Anjum Parvez said raising the loan was a viable method to reduce stress on the corporations. He said the two other RTCs in north east and north west of the state will also follow suit in the coming days.

Noting that delaying PF deposits amounts to violation of rules, he said raising loans at around 8% interest rate would help avoid paying 12% or 13% interest on delayed PF deposits. 

Meanwhile, officials fear that the burden of accumulated losses, which stood at Rs 2381.41 at the end of 2018-19, expected to double by the end of 2020-21 as limited earnings and rising expenditure has threatened the financial stability of the corporations.