SBI Set to Fund Hyderabad Metro at 2% Interest Rate as Centre Steps In

Key meetings between Telangana Chief Minister A Revanth Reddy, Union Coal Minister Kishan Reddy, Railway Minister Ashwini Vaishnaw, and Urban Development Minister Manohar Lal Khattar have led to a new financing model for the Hyderabad Metro Rail project. The State Bank of India (SBI) is expected to become the principal lender for both the takeover of Phase I and the expansion of Phase II.

Sources indicate that the Centre's involvement could enable funding at an interest rate of around 2%, significantly lower than the nearly 9% burden the state government would have faced with independent financing. This proposal effectively rules out the Indian Rail Finance Corporation (IRFC) as a funding source, as the Railway Ministry maintains that IRFC's primary mandate is to finance railway infrastructure.

The developments have also eased political tensions between Chief Minister Revanth Reddy and Union Minister Kishan Reddy. Earlier, the Chief Minister had accused Kishan Reddy of obstructing the project. However, Kishan Reddy's role in arranging meetings with key Union ministers and facilitating discussions has moved the project forward.

While the state government's takeover of Metro Phase I may still face procedural delays, officials believe the latest consultations have created a conducive environment for both the takeover and the launch of Phase II. The outcome is seen as a win-win for both leaders: the Chief Minister secures low-cost financing for critical infrastructure, while Kishan Reddy can claim credit for bridging the Centre and state government to find a viable solution.