HMDA lands in neck deep financial crisis

Hyderabad: Headless and hamstrung by crippled finances, the Hyderabad Metropolitan Development Authority (HMDA) is looking up to Chief Minister K Chandrashekar Rao for a bailout to help clear the critical mess in which it finds itself.

The situation in HMDA today is so pathetic that it has shifted its employee salary accounts to private banks in order to prevent freezing by lenders.

It is reliably learnt that KCR, during his recent visit to Delhi, made a representation to the Union Finance Minister on withdrawing the penalty amounts imposed on HMDA by the lending banks and the Income-Tax Department for defaulting on payments over the past one decade.

The HMDA has almost stopped re-paying interest amount on a loan of Rs 1,008 crore taken in 2011 and is locked in a bitter battle with the Income Tax Department, to which it owes over Rs 2,000 crore.

Sources said that HMDA has to pay nearly Rs 200 crore as interest amount, which has been pending over the last three years. The metropolitan authority had mortgaged seven land parcels consisting of 473 acres to the Housing and Urban Development Corporation (HUDCO) Bank and Indian Bank to secure the Rs 1,008-crore loan.

The metropolitan authority mortgaged 308 acre in Kotwalguda (155 acre), Izzatnagar (32 acre) and Shamshabad (160 acre) to secure Rs 650-crore loan from HUDCO and 165 acre in Inzapur (22 acre), Jawaharnagar (50 acre), Tellapur (25 acre) and Budvel (68 acre) to secure another Rs 358-crore loan from the Indian Bank.

In reply to a Right to Information (RTI) on various loan amounts, HMDA Chief Account Officer E Narsimhan informed that they had an interest outflow of around Rs 18 crore every month, but due to lack of funds, they had stopped payments to lenders.

'We paid a total interest amount of Rs 72 crore in five installments till September 2014 at an annual floating rate of 8.75 percent,' he said. During 2011, the authority had planned to generate revenues by collecting layout development charges and by collecting penalty from unauthorised structures under its jurisdiction.

The HMDA could mop up only Rs 443 crore against a target of Rs 846 crore, resulting in severe shortage of funds. Adding to its woes is the absence of a regular commissioner to manage crucial affairs of HMDA.

This had a cascading impact on the overall performance of the HMDA, which is under the Ministry of Municipal Administration and Urban Development, overseen by the Chief Minister himself. The HMDA pays Rs 33 crore as salaries and wages to HMDA staff every year and also owes another Rs 20 crore to other lending agencies.