Hyderabad: After the World Bank and Asian Development Bank (ADB), two other financial institutions, HUDCO and German state owned investment and development bank KfW, have come forward to extend loans to develop Andhra Pradesh's capital, Amaravati.

The World Bank and ADB have already finalised the loan of Rs 13,000 crore and expect the disbursement to commence from next month. It is understood now that HUDCO and KfW had decided to form into a consortium to extend a loan of Rs 16,000 crore to the Capital Region Development Authority (CRDA) for the construction of Amaravati. The state cabinet that had met on Thursday had given its approval authorising the CRDA commissioner to initiate discussions with HUDCO and KfW on the Rs 16,000 crore loan.

In the last budget, Union Finance Minister Nirmala Sitharaman said that the Centre would facilitate funds from multilateral development banks and agencies to build Amaravati. In a first tranche, Rs 15,000 crore will be arranged, and later more funds will be facilitated.

"Both HUDCO and KfW had agreed in principle to extend a loan to the tune of Rs 16,000 crore. Of the total loan amount, HUDCO would release Rs 11,000 crore and KfW Rs 5,000 crore. Other modalities are being worked out. Very soon the loan agreement is expected to be finalised," a highly placed source in the AP government aware of the development told DH.

The issue had also come up for discussion during the CRDA meeting held on Monday in which chief minister N Chandrababu Naidu had also participated.

The Department of Economic Affairs (DEA) recently informed the Andhra Pradesh government that the World Bank and ADB have accepted the Andhra Pradesh Capital Region Development Authority's (APCRDA) proposal, 'The Amaravati Inclusive and Sustainable Capital City Development Program.'

Each of these two banks will provide fund support of Rs 800 million under the Program for Results (PforR) and Result-Based Lending (RBL) programs, respectively. The Andhra Pradesh government submitted funding proposals totaling $1.786 billion, or Rs 15,000 crore, and the state government, with support from the union government, will cover the remaining share.

With funds from international agencies, APCRDA plans to construct trunk roads and utility ducts for essential services, stormwater drainage, and flood mitigation through the development of streams, retention reservoirs, and flood defense systems. It will also develop roads, utilities, and green spaces in LPS zones; establish a 24x7 clean water supply system and sewerage system; construct key public buildings adhering to green standards; and strengthen institutional capacities.