Maharashtra: State govt provides guarantee for Rs 11,401 crore loan and interest by MahaVitaran

The state government has provided guarantee for the loan and interest of Rs 11,401 crore raised by the cash strapped Maharashtra State Electricity Distribution Company (MahaVitaran) from various financial institutions to cover the loss incurred during the lockdown period due to the outbreak of COVID 19. The government has also waived the guarantee fee. Of the 11,410 crore, loan is Rs 8,500 crore and interest Rs 2,901 crore.

The government in a notification issued by the finance department desk officer Dipak Suryavanshi on Monday has clearly said that it will not be responsible for the payment of penal rate of interest if there will be delays in loan repayment by MahaVitaran.

The lenders will not provide additional loans to the MahaVitaran without its prior approval and the state distribution company will also not approach other lenders. The infrastructure/property developed from the loan will be mortgaged with the lenders.

According to the notification, it is binding on the MahaVitaran, which is reeling in a deep financial crisis amid rising arrears from various consumers, to use loan for the purpose it was taken from the lenders. ‘’If MahaVitaran defaults in loan repayment then in that case it will complete the process by sale or auction of its movable and immovable properties. Till the MahaVitaran repays the loan the lenders won’t be able to touch the government guarantee to recover its loan,’’ said the government in its notification.

The government has said it will be MahaVitaran’s responsibility to negotiate with lenders for an equal rate of interest. Besides, the onus is solely on MahaVitaran to repay principal amount and interest to the lenders. The MahaVitaran will have to submit a monthly status report to the state government on repayment of loan.