Hyderabad: Telangana government is considering legal action against two financial institutions — Power Finance Corporation Ltd (PFC) and Rural Electrification Corporation Ltd — after they refused to release balance loan amounts to fund irrigation projects (REC).
The government views the loan rejection as a breach of the tripartite agreement it had signed with them. Following the Union Finance Ministry’s refusal to allow the state administration to raise open market borrowings, PFC and REC are now refusing to release the loan funds.
In the past, the state government and these financial institutions had inked a tripartite agreement for the building of various irrigation projects. Despite the fact that PFC and REC had given almost 90% of the loan amounts as agreed, they opted not to release the remaining amounts until the State government had Reserve Bank of India approval (RBI).
The PFC and REC stopped delivering loan amounts in April of this year, official sources said to The New Indian Express. The state administration projected raising Rs 37,737 crore from the PFC, with Rs 33,079 crore already issued. Similarly, the REC has only released Rs 12,742 crore of the approved loan amount of Rs 30,536 crore. TWRDC (Telangana Water Resources Development Corporation) has also agreed to take out a Rs 13,516 crore loan. However, it has only received Rs 12,239 crore as of March 2022.
