States have swapped 103,652 crore high interest debts : Minister

New Delhi, Dec 19 (UNI) Several state governments in the country have swapped high coupon loans, amounting to Rs 1,03,652 crores, during 2002-03 to 2004-05 under the State Debt Swap Scheme under which the States were allowed to pre-pay their high coupon loans including small savings loans, Rajya Sabha was informed today.

Answering questions regarding the problems concering swap high coupon loans from National Small Savings Funds (NSSF) with current lower coupon borrowings, Minister of State for Finance Palanimainckam, in a written reply, said the rate of NSSF loans depended on cost of funds which included interest paid to the depositors, remuneration paid to Department of Posts and Banks and commission paid to small savings agents.

There was a mismatch in the maturity of small savings deposits and tenor of loans to States. Loans to states were for a period of 25 years, whereas average maturity of deposits was around five to six years. However the benefit of reduction in interest rate of small savings depotis whenever affected from 1999 onwards has been fully passed on to the states, he said.

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