File photo of the BDA board outside their head office
Credit: DH Photo
Bengaluru: The Bangalore Development Authority (BDA) plans to borrow Rs 1,000 crore from nationalised banks by mortgaging 2,500 vacant corner sites in Nadaprabhu Kempegowda Layout.
This is the first time that the government agency responsible for town planning is considering raising bank loans by mortgaging its real estate.
Losses due to delays in allotting sites in Shivaram Karanth Layout are said to have prompted the decision.
Having developed 60 layouts, the BDA was never short of funds to meet its expenses though it does not depend on government grants. While the BDA raises revenue from various sources, including sale of corner sites, development plan approval fees and property taxes, it does not have a history of pledging sites to raise loans.
BDA Commissioner N Jayaram confirmed the plan to raise the loan. “We have spent Rs 1,000 crore on the of Shivaram Karanth Layout. We need another Rs 2,500 crore to complete the project. If the allotment of sites is delayed, we will raise a loan of Rs 1,000 crore,” he told DH.
BDA is banking on its affidavit in the Supreme Court where it proposed to mortgage corner sites of developed residential estates to fund Shivaram Karanth Layout.
“We cannot start site allotment because of the court proceedings. There is also a delay in selling 3,500-odd ready-to-occupy flats. We need about Rs 200 crore every month to pay bills but our revenue sources have taken a hit,” a BDA official said.
The official said the plan to raise the loan would be dropped if the High Court of Karnataka allows the BDA to allot sites to the public during the model code of conduct.
“We expect a revenue of Rs 7,000 crore from the allotment of sites in Shivaram Karanth Layout,” he said.
While the BDA is learnt to have held multiple meetings with the Bank of Baroda, the standard process requires that it take quotations from multiple banks by floating tenders.
Well-placed sources criticised the BDA’s plans to directly engage with a financial institution and suggested that the agency float tenders to get the best prices (low interest rates) from nationalised banks.