Union Government has alerted all nationalized banks to exercise caution while giving loans to Andhra Pradesh. As a result, many loans which are in the final stages of sanctioning were stopped. The banks are now worried about the loans that are already sanctioned.
The Government has escrowed incomes from future taxes and liquor revenues and tried to bring loans through Andhra Pradesh State Development Corporation. The Center has clarified that it is totally flawed and such loans against future revenues are against the constitution.
APSDC got 25,000 Crores in a similar model from the consortium of national banks. SBI has put on hold the last trench of 1800 Crore Rupees as a result. 1000s of Crores for Beverages Corporation also got stopped due to the Central Government’s warning to the banks.
With the state government already exhausting all limits of borrowing for this year, only way out is loans through various corporations and divert the money for other schemes.