Andhra clears Rs 7,500 crore Amaravati loan guarantee with strict conditions

Andhra Pradesh on Friday approved a government guarantee and a letter of comfort for the Capital Region Development Authority (CRDA) to secure a Rs 7,500 crore loan from the National Bank for Financing Infrastructure and Development (NaBFID) for developing the greenfield capital city of Amaravati.

S Suresh Kumar, principal secretary, Municipal Administration and Urban Development, said the state agreed to extend the support with specific conditions. These include the CRDA meeting all debt servicing obligations from its own resources.

“The government after careful examination of the proposal, hereby agree for providing Government Guarantee and Letter of Comfort for NaBFID loan amount of Rs 7,500 crore,” Kumar said in the government order (GO).

He said the guarantee will remain in force for the entire tenure of the loan and will cover both principal and interest. The state’s backing will be invoked only if the CRDA fails to meet its obligations to NaBFID.

Kumar also noted that the CRDA must pay a two per cent guarantee commission on the guaranteed amount, along with other conditions set out in the order.

The loan is intended to support ongoing and planned development works in Amaravati, which the state continues to progress as a greenfield capital project.

The approval marks a significant financial step for the CRDA, as the large-scale development requires sustained infrastructure funding.

According to the order, the government’s role is limited to offering the guarantee and comfort letter while ensuring that the responsibility for debt servicing rests entirely with the capital region authority.

(With inputs from agencies)