M A I N   N E W S

Bank confirms Punjab mortgaged PUDA assets
Ruchika M Khanna/TNS

Chandigarh, August 26
Canara Bank today confirmed it had extended a loan of Rs 500 crore to the Punjab Urban Development Authority (PUDA) after the latter mortgaged its properties as collateral. The loan was sanctioned by the public sector bank on August 21 and the cheque was delivered to the PUDA authorities on August 23.

The Punjab Government stood guarantee for PUDA, which mortgaged its properties. Their value has been assessed by our valuers at a rate much higher than the loan amount. — Neeraj Mittal, AGM, Canara Bank, Sector-17 branch

The Punjab Government has so far been claiming it has not mortgaged any government property to secure a loan.

The Tribune has learnt that PUDA has not only taken a loan of Rs 500 crore by claiming that the loan amount will be used for acquiring more land for the authority, but it is also in talks with another public sector bank for securing an additional loan of Rs 500 crore - again by mortgaging its properties.

Neeraj Mittal, assistant general manager and in-charge of Canara Bank, Sector-17 branch (which disbursed the loan to PUDA), said the bank had sanctioned a loan of Rs 500 crore to PUDA after they approached the bank saying they needed money to acquire land in Punjab.

“The Punjab Government stood guarantee for PUDA, which mortgaged its properties. Their value has been assessed by our valuers at a rate much higher than the loan amount,” he said.

He refused to divulge details regarding the properties that had been mortgaged by PUDA. While banks seek a third party credit rating of any individual/corporate before sanctioning even small loans, the bank in this case reportedly did not go in for any credit rating of the loanee.

While bank general manager Devinder Arora refused to comment, bank officials said since the government accounts were subject to CAG audits and PUDA’s balance sheets proved to it to be a cash-rich body, they did not go in for any credit rating of PUDA.

They said there was no foolproof system to check if the loan taken by the government would be utilised for the intended purpose.

The Tribune has been highlighting the fact that the loan taken by PUDA, on behalf of the state government, is to be used to meet the state’s day-to-day expenses, including payment of salaries and pensions, as the state is facing a severe cash crunch.

Stamp duty waiver sought

PUDA has sought exemption from paying stamp duty to the state government for the registration of sale deeds mortgaged by PUDA in order to get loans on behalf of the state government. It is required to pay a stamp duty of 10 per cent in case the land being mortgaged is located in the urban area and 8 per cent if it falls in the rural area. The case has been referred to the Legal Remembrancer.

Tiding over financial woes?

The cash-strapped Punjab Government has so far been claiming it has not mortgaged any government property to take a loan

Canara Bank’s Sector-17 branch, Chandigarh, sanctioned the loan on August 21 and delivered the cheque to PUDA on August 23

PUDA is believed to be in talks with another bank for securing additional loan of `500 cr by mortgaging its properties

While PUDA claims the loan amount will be used for purchase of property in Punjab, sources say the amount will go towards paying salaries and pensions of government employees