To move forward the first phase of the metro project’s finance smoothly, KMRL signed a term loan agreement for Rs 1,170 crore with Canara Bank on 20th July 2014. For the construction of renowned Kochi Metro Rail project, the estimated cost is Rs 5,181 crore with Rs 2,170 crore coming from external funding sources. The Metro authority said that Canara Bank has taken this project as a special case with their request of interest reduction and provided relaxations on their conditions. The Canara Bank chairman and managing director R K Dubey assured support to various infrastructure projects undertaken by the state government including “Kannur airport and other projects being implemented in Thiruvananthapuram and elsewhere in the state”. There are no difficulties in providing more fund and further assistance for the metro project, he said adding that a long-term contract with the KMRL.
KMRL has already signed an agreement with French development agency, Agence Francaise de Developpement (AFD), for 180 million Euros (approximately Rs 1,500 crore) on February 8. “With Canara Bank providing the loan, the approved external funding requirements of the Metro agency has been met and we now have a formal financial closure,” said power and railway minister Aryadan Mohammed. The bank loan is provided for a term of 19.5 years with a moratorium of seven years and the rate of interest will be 10.80% (floating). This can be called as the largest single loan given by a bank for any Metro project in India. “We approached various funding agencies, domestic banks and financial institutions for a term loan for the balance amount. Though, we received sanctions from almost all banks we approached, in terms of interest, tenure, other costs and charges, Canara Bank emerged as the best bet,” said KMRL managing director Elias George.