Centre Says It May Reduce Interest After Kaleshwaram Project Completion

The Central Government has said it will consider reducing the interest rates on loans for the Kaleshwaram Project after its full completion. It clarified that if loan repayments are rescheduled or restructured, as per RBI rules, the loan account may be downgraded from "standard" to "sub-standard".

This was stated by Union Minister of State for Finance Pankaj Chaudhary in a written reply to a question raised by Telangana Congress MP Chamal Kiran Kumar Reddy in the Lok Sabha. He mentioned that the Telangana Government had requested a restructuring of the project loans.

He explained that Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) have given loans to the project's Special Purpose Vehicle (SPV). These non-banking finance companies raise funds in different ways and decide interest rates based on their costs. The REC has already extended the project completion deadline to December 2024. The Centre said interest rates would only be reviewed after the project is completed.