telangana: Finally, Telangana gets green light from Center to raise Rs 4,000 crore loan | Hyderabad News

HYDERABAD: After nearly two months of turbulent talks, Telangana has finally secured some leverage from the Union Finance Ministry, which on Friday gave the state an ad-hoc clearance to raise market loans in the form of bonds at an auction to be conducted by the Reserve Bank of India.
The state government will be able to raise Rs 4,000 crore on June 7 in the auction, which will be more than the initial figure of Rs 1,000 crore. “Final clearance will be granted next week,” government sources said.
The ad hoc clearance was obtained after the state made clear to the Union Finance Ministry how the shortage of funds was affecting even the payment of government employees’ salaries and the pension of retirees, the sources added.
T can lose part of the loan this financial year
It is also learned that due to the new notification from the Ministry of Finance on the limit on off-budget borrowing for states, Telangana may lose part of the proposed loan of Rs 53,700 crore during this financial year. It must be said that Kerala had previously obtained ad hoc authorization to raise bonds.
Initiating the pending motion, the Telangana government has already informed the RBI. The state will increase the bonds with a 13-year repayment schedule with neighboring Andhra Pradesh (two bonds of Rs 1,000 crore each with a tenor of 13 and 14 years), Tamil Nadu (Rs 20.00 crore with a 20-year term) and Maharashtra (two bonds of Rs 2,000 crore each with an eight-year term) on Tuesday.
In total, these four states will raise bonds to the tune of Rs 12,000 crore. It is important to note that states including Telangana will release them in a regular format instead of using the additional loan facility or green shoe option.
The green shoe option allows states to take more than the notified amount for the RBI auction.
Choosing the green shoe option indicates that investors are interested in these securities, explained a financial expert.
Interestingly, following the 2020 pandemic, the Telangana government used the green shoe option in December and increased the value of State Development Loans (SDLs) to cover Rythu program payments. Bandu.

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