Andhra Pradesh has extended a government guarantee and a letter of comfort to the Capital Region Development Authority for availing a Rs 7,500 crore loan to develop the greenfield capital city of Amaravati, said an official.
S Suresh Kumar, principal secretary, Municipal Administration and Urban Development, said the guarantee and the letter of comfort for the loan from the National Bank for Financing Infrastructure and Development (NaBFID) came with conditions such as the Capital Region Development Authority (CRDA) meeting the debt servicing obligations from its own resources and others.
"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," said Kumar in a government order (GO) on Friday.
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Spanning the entire tenure of the loan period, he said the guarantee extends to the principal and interest part as well.
The government guarantee shall come into force only in the event of failure to pay the obligations to the lending institution by APCRDA, he said.
Further, he highlighted that the capital region authority should pay two per cent guarantee commission on the guaranteed amount, among other conditions.
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