SBI is likely to step in to finance Metro projects at a very low rate of interest

The Centre’s likely entry into the project is expected to reduce the interest burden on the state government. File | Photo credit: RAMAKRISHNA G

The two-day crucial meetings attended by Chief Minister A Revanth Reddy, Union Coal Minister Kishan Reddy, Railway Minister Ashwini Vaishnaw and Urban Development Minister Manohar Lal Khattar appear to have paved the way for a new financing model, with State Bank of India (SBI) likely to become the lead lender in both the Hyderabad railway takeover and Phase II.

Sources said the Centre’s likely entry into the project should enable financing at an interest rate of around 2%, which is significantly lower than the nearly 9% interest burden the state government would have faced had it opted for independent financing.

According to sources, the proposed funding structure has effectively ended the possibility of Indian Rail Finance Corporation (IRFC) financing the project. The Ministry of Railways is understood to be insisting that IRFC’s primary mandate is to fund railway infrastructure projects.

The latest development also appears to have eased political tensions involving Mr Revanth Reddy and Mr Kishan Reddy, with the former accusing the latter of deliberately obstructing the project or unwillingness to extend support for the metro expansion. However, Kishan Reddy’s efforts in arranging meetings with key Union Ministers and facilitating discussions between them helped move the project in a positive direction.

While the state government’s takeover of Metro Phase-I may still face procedural delays, officials believe that the latest consultations have created a conducive environment for both the takeover proposal and the launch of Metro Phase-II.

The result is said to be a win-win situation for both Mr. Revanth Reddy and Mr. Kishan Reddy. While the Chief Minister has the benefit of securing cheap funding for the critical infrastructure project, Mr. Kishan Reddy can claim credit for bringing the Center and the state governments together to find a viable solution.

Published – 23 Jun 2026 23:48 IST