Greater Hyderabad civic body seeks cheaper loans, eyes Rs 250 crore annual savings

The Greater Hyderabad Municipal Corporation (GHMC) is negotiating with nationalised banks to refinance around Rs 6,500 crore in existing borrowings at lower interest rates, a move that could save the civic body more than Rs 250 crore a year.

The loans were raised to fund major infrastructure projects, including H-CITI, SRDP and SNDP. They currently carry an interest rate of around 8.9%, while GHMC officials are seeking to bring the rate down to around 7%.

GHMC Commissioner RV Karnan said several banks had expressed interest in refinancing the loans. Some have offered rates of around 7.8%, while the same nationalised bank from which GHMC had borrowed has offered around 7.4%.

The civic body is negotiating for a rate closer to 7%.

GHMC’s annual debt-servicing burden is currently estimated at around Rs 2,000 crore. Officials believe refinancing the loans at a lower rate could provide significant relief to the corporation’s finances.

The move comes as the state government focuses on restructuring municipal debt and managing existing liabilities without affecting funding for key infrastructure projects.

The New Indian Express reported on Tuesday, August 25, that the refinancing exercise could help GHMC reduce its annual financial burden while continuing to fund major infrastructure works.