NHAI Notifies Applicable Interest Rate (Jul-Sep 2026) for HAM Projects

The National Highways Authority of India (NHAI), vide Policy Circular No. 8.4.55/2026 dated July 11, 2026 (the “Circular”), has notified the applicable rate of interest for Hybrid Annuity Model (HAM) projects for the quarter commencing July 1, 2026. The Circular has been issued pursuant to Article 23.6.4 of the amended Model Concession Agreement (MCA) for HAM projects, which provides that interest on the reducing balance of the Completion Cost shall be payable at a rate equal to the average one-year Marginal Cost of Funds based Lending Rate (MCLR) of the top five Scheduled Commercial Banks plus 1.25%.

Under the amended MCA, NHAI is required to declare the list of the top five Scheduled Commercial Banks on September 1 of each calendar year, based on balance sheet size as declared in their annual reports, and adopt their applicable one-year MCLR at the commencement of each quarter for determining interest under Article 23.6.4. Pursuant to this mechanism, NHAI has notified the applicable interest rate for the period July 1, 2026 to September 30, 2026, with the next review scheduled for September 1, 2026.

For the quarter July 1, 2026 to September 30, 2026, NHAI has identified the following banks and their respective one-year MCLR:

• State Bank of India – 8.70%;
• HDFC Bank – 8.40%;
• ICICI Bank – 8.40%;
• Bank of Baroda – 8.75%; and
• Punjab National Bank– 8.80%.

Based on the one-year MCLR of the top five Scheduled Commercial Banks, the average MCLR for the period July 1, 2026 to September 30, 2026 works out to 8.61%. Accordingly, in terms of Article 23.6.4 of the amended MCA, the Circular notifies the applicable rate for the said quarter as the average one-year MCLR of 8.61% plus 1.25%, which works out to 9.86% per annum.

The Circular provides certainty regarding the benchmark interest rate applicable to HAM projects for the relevant quarter and ensures uniform implementation of the interest computation mechanism prescribed under the amended MCA.