Central government closes about 62 toll plazas

In the recent action, central government informed in Lok Sabha that they has closes about 62 toll plazas, which are on highways and expressways in public interest after the recovery of cost of capital.

During the period of question hour in Lok Sabha, Pon Radhakrishnan, the minister of State for Road Transport and Highways, stated that “In public interest our government has closed about 62 toll plazas on national highways and expressways after the recovery of capital cost”.

All of these toll plazas were located in Karnataka, Madhya Pradesh, Uttar Pradesh, Bihar, Gujarat,  Kerala, Andhra Pradesh, Tamil Nadu,  Maharashtra, Telangana, Chhattisgarh, Manipur, Odisha and Rajasthan. Recently, government launched a web portal to make sure that all the road users can access the information that now onwards concerning toll plazas which are on the expressways and national highways are now under National Highway Authority of India and Road Transport and Highways Ministry.

The more he added that the total revenue collected from all of these toll plazas are about more than Rs 9283.23 crore for the year 2012 to 2013 whereas; Rs 11,436.59 crore for the year 2013 to 2104 and about Rs 14,214.48 crore for the year 2014 to 2105.

However; the information also includes the required fee rates for the different sets or categories of vehicles at any of these  toll plazas, as well as the information about the facilities available at troll plaza and the emergency contact numbers.

In a major development, the finance ministry has allowed the public sector banks to use their real estate to raise money from the market through Special Vehicle Purpose (SPV). Most of the properties which would give handsome gains to banks are situated in metropolitan areas such as Mumbai, Chennai and Delhi.

G S Sandhu, the Union government’s financial services secretary said that besides hiving-off non-core assets at good valuations, public sector banks can use their real estate to raise money from the market through an SPV.

Finance Minister Arun Jaitley while presenting the Union Budget for 2014-15 had said PSBs will need equity capital infusion of Rs 240,000 crore by March 2018 to be in line with Basel-III norms. With its huge fiscal deficit, the government is battling to rein in expenditure. It has limited resources to infuse capital in PSBs and has asked the latter to explore options such as offloading non-core investments and exploiting real estate assets.

As per expert opinions, government-owned Bank of India (BOI) could generate about Rs 2,500 crore by monetizing its real estate assets, especially properties in metropolitan cities, for equity capital.

Exemplifying the arrangement for such a transaction, a senior BOI executive said the Mumbai-headquartered bank could float a wholly-owned subsidiary for the deal. The selected real estate assets that include buildings, head office premises and residences would be formally transferred to this subsidiary, a Special Purpose Vehicle (SPV), at value. He said the bank had been working for about six months on a proposal involving valuation and the estimate of benefit and tax burden. The market value of real estate assets is pegged around Rs 6,000 crore. The book value could be Rs 2,800-3,000 crore. The bill for tax, stamp duty and fees could be about Rs 500 crore. After deducting expenses, the gains estimated at Rs 2,500 crore would straightaway add to the bottom-line and bolster the capital adequacy ratio. The BOI’s capital adequacy was 9.97 per cent by Basel-III norms at the end of March this year. BOI would pay rentals to the subsidiary for using space. This subsidiary will need capital infusion from the parent bank. It will raise debt for buying out real estate assets of the bank.

Prior to such an arrangement taking place, BOI will have to get past two challenges like securing approval from the Reserve Bank of India (RBI). Secondly, clarity on paying taxes ie exemption from capital gains and stamp duty. On the regulatory nod, a BOI executive said the bank had already sounded out RBI.