Andhra Pradesh has extended a government guarantee and a letter of comfort to the Capital Region Development Authority (CRDA) for availing a ₹7,500 crore loan intended for the development of the greenfield capital city of Amaravati, an official confirmed.
S Suresh Kumar, Principal Secretary, Municipal Administration and Urban Development, stated that the guarantee and the letter of comfort for the loan, sourced from the National Bank for Financing Infrastructure and Development (NaBFID), came with specific conditions. These conditions mandate that the CRDA must meet the debt servicing obligations from its own resources, among other requirements.
"The government after careful examination of the proposal, hereby agree for providing Government Guarantee and Letter of Comfort for NaBFID loan amount of ₹7,500 crore," Kumar said in a Government Order (GO) issued on Friday.
He confirmed that the guarantee spans the entire tenure of the loan period and covers both the principal and interest components. Crucially, the government guarantee shall only come into force in the event of the APCRDA failing to meet its payment obligations to the lending institution. Furthermore, the capital region authority is required to pay a two per cent guarantee commission on the guaranteed amount, along with other stipulations.
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