Infrastructure News

Infra bank Nabfid to lend Rs 4 lakh crore infra sector by March 2026, ET Infra

MUMBAI: The government-backed National Bank for Financing Infrastructure and Development (Nabfid) is looking to lend Rs 4 lakh crore to the infrastructure sector by March 2026. The company is also looking at setting up a subsidiary to provide credit enhancement to borrowers in infrastructure, which will include urban bodies.

Nabfid, which started operations last year, is the youngest development financial institution and the first to be set up by the government after liberalisation to implement its ambitious plans for the infrastructure sector. The company has started operations with Rs 20,000 crore capital and a Rs 5,000-crore grant from the government.
“We plan to leverage our capital of Rs 20,000 crore tolend up to Rs 4 lakh crore by March 2026. We are looking at raising Rs 30,000 crore through long-term bonds this year,” Nabfid MD Rajkiran Rai said. He added that the company has granted in-principle approvals to proposals of Rs 50,000 crore, and final sanctions have crossed Rs 25,000 crore, with road and energy being the major sectors.

According to Rai, the environment has improved for a DFI lending to infrastructure as the government has addressed all the problems associated with projects in the sector, and there are better contracts and strong government counterparties that have considerably reduced the risk in this segment. Funding has also become easier. Nabfid is chaired by veteran banker KV Kamath, who headed ICICI during its DFI days.

“Insurance companies have assets under management (AUM) of Rs 60 lakh crore and pension funds of around Rs 10 lakh crore. They are both growing in double digits, and they all need 20-yearplus assets. There is also a lot of interest from foreign pension funds, sovereign wealth funds and high net-worth investors. So the changes will aid in raising the required resources for the kind of institutions,” said Rai.

Nabfid can also bring down its cost of funds thanks to the government grant. “Our purpose is to complement and support the banking system. We will develop better project assessment capabilities with sector-specific and technical skills, enabling us to take up projects and down-sell or share them with banks,” said Rai. He said that the company plans to develop a credit enhancement product. “Wherever the projects are ‘AA and above’, they can hit the bond markets, but infra projects are usually ‘BBB+’ in the construction stage,” he said.

  • Published On Jun 3, 2023 at 08:20 AM IST

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