National Highways Authority of India (NHAI) has singed Memorandum of Understanding (MoU) with country’s largest lender State Bank of India (SBI) for long term unsecured loan of Rs. 25,000 crore for 10 years with 3 years of moratorium on repayments. This is SBI’s highest long term unsecured loan to any entity and also largest loan ever sanctioned to NHAI in one stroke by any institution.
The loan sanctioned by SBI is unsecured. It has no principal repayment liability for initial three years. But after three years, repayment will be done in 14 equal half yearly installments. The total loan tenure is 10 years. NHAI can repay or prepay it at any time without any prepayment penalty. The rate of interest will be based on one month marginal cost of funds based lending rate (MCLR). Interest accrued on amount actually outstanding will be paid on monthly basis.
NHAI traditionally relied on borrowing through long term bonds issued to various investors, including LIC, EPFO and other qualified investors and Tax Free bonds and Masala Bond issued in year 2017. But recently it had invited Expression of Interest (EoI) from Scheduled Commercial Banks (SCBs) to fund Rs. 25000 crore as unsecured loan for 10 years with 3 years of moratorium on repayments. In response to this EoI, SBI had offered to fund t entire requirement of Rs. 25000 crore based on one month MCLR.
National Highways Authority of India (NHAI)
NHAI is an autonomous statutory agency of Central Government, responsible for management of network of over 70,000 km of national highways in India. It was established through NHAI Act, 1988. In February 1995, it was formally made an autonomous body. It is nodal agency of Ministry of Road Transport and Highways. It is responsible for development, management, operation and maintenance of National Highways. It is headquartered in New Delhi.