BMC breaks its FDs to keep BEST afloat
Amount of Rs 478 is part of the R1,136 the civic body has promised to Undertaking to get rid of long-pending debts
The Brihanmumbai Municipal Corporation (BMC) recently broke three of its fixed deposits (FD) from its reserve fund to bail out the BEST Undertaking. It has decided to give Rs 1,136 crore to the BEST to get rid of its debts and another R600 crore for monthly expenses. The BMC has already given the Rs 600 crore and in August it broke its FDs to give Rs 478 crore (to repay part of the Rs 1,136 debt) to BEST.
The FDs were broken as per BMC's plan for its transport wing which is reeling under debts. The BMC will provide financial support to the BEST. The civic body sanctioned Rs 600 crore in June, — Rs 100 crore per month - for the rest of the year. It has decided to give Rs 1,136 crore as the transport wing has that much debt and has to pay 9 to 11 per cent interest on it.
Though the country's richest civic body has enough money, it hadn't made a provision in its budget for such expenditure. So in an emergency, it decided to break the FDs. As per information given by BMC officials, out of Rs 1,136 crore, BEST needed to pay R478 crore in August. The BMC didn't have that cash during that period and so it broke three FDs from the State Bank of India between August 19 and August 21. A proposal will be tabled in the Standing Committee meeting on Monday for post approval of the decision.
The BMC has FDs worth Rs 80,000 crore in various banks and earns crores of interest on it every year. It earned Rs 56 lakh on the three FDs till mid-August. "Breaking of FDs is a bad sign and the BEST is not giving any account of where the money was used. Out of Rs 600 crore BEST used Rs 450 crore for gratuity and gave Rs 150 crore to contractors. Why is the BMC is taking financial risk for BEST, if they are not serious?" said Ravi Raja, leader of opposition in the BMC.
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