The Kerala State Road Transport Corporation (KSRTC) is grappling with a significant financial challenge, having incurred an additional Rs 300 crore in interest on loans taken from cooperative banks to cover pension payments. Since February 2018, KSRTC has relied on these loans, disbursed by a consortium of cooperative banks, to meet its pension obligations, with the understanding that the government will repay the loans with interest.
Under the agreement, the loans must be repaid within three months, and the initial interest rate was set at 10 percent. Each month, KSRTC requires Rs 80 crore for pensions, and repaying this amount incurs at least Rs 4 crore in interest, which is also covered by government allocations. This financial strain results from the government’s inability to promptly assume pension liabilities for public sector undertakings, necessitating the loan arrangement.
KSRTC is also facing similar issues with salary payments, having borrowed Rs 100 crore from Kerala Bank at a 10 percent interest rate, with interest accruing until government assistance is received. Even with an overdraft of Rs 50 crore from the State Bank of India for salary distribution, the corporation has had to pay Rs 48 lakh in interest per month, highlighting the ongoing financial difficulties despite government support.
