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Sanjay Jog
Mumbai, Oct 13: The Maharashtra Krishna Valley Development Corporation (MKVDC) has become the first state undertaking in the state to float an SLR bond. The corporation is privately placing five-year non-convertible bonds worth Rs 350 crore carrying a coupon of 14.35 per cent.
The issue, backed by the state government guarantee, carries a greenshoe option of Rs 150 crore. The issue, lead managed by Alpic Finance, has so far mopped up a paltry Rs 50 crore. It will close on October 28.
The issue has received poor response from commercial banks which have written to the Reserve Bank of India seeking confirmation about the SLR status. MKVDC apparently has not yet received the Reserve Bank of India clearance in this regard.
However, according to state advocate general CJ Sawant, the MKVDC bond issue has received the status of approved securities on the strength of the government guarantee and therefore does not required the RBI's prior approval.
Sawant said that bonds series V are approved securitieswithin the meaning of Section 5 (a) of the Banking Regulation Act. The investment made by banks or financial institutions in these securities must be considered as securities within the meaning of Section 24 of the Banking Regulation Act. These securities must not be encumbered and such securities can be accounted for maintaining SLR, he said.
State irrigation secretary RG Kulkarni said that bonds and other securities as mentioned in Section 20, sub-section (a) of the Indian Trusts Act and which the government is backing with guarantee do not require the RBI or central government notification.
He mentioned that the series V bond and the earlier bonds issued by MKVDC and other irrigation development corporations have been listed on the National Stock Exchange and stock exchanges in Mumbai and Pune.
With the status of an SLR security, it would be possible for the state to lower the rate of interest and still make it attractive to banks to invest in these bonds against their SLR limit, he said.
Kulkarnisaid that the cooperative banks, particularly those falling in the area of MKVDC's operations, are very keen to invest in these bonds, as they would benefit from MKVDC projects. "We trust that the RBI will cooperate and do the needful without any loss of time for timely completion of the irrigation and drinking water supply projects undertaken by the government of Maharashtra through MKVDC," he added.
MKVDC, which will have to harness the 594 thousand million cubic feet (TMC) water of Krishna river by May 2000, will still have to complete 367 of the total 873 irrigation projects. On completion of all these projects, 21.58 lakh hectares will be brought under irrigation and a population of 87 lakh people in 763 towns will be provided with drinking water.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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