India's Infrastructure Bank Nabfid To Raise Rs 5000 crore Via Maiden Bond Market Issue In Q1 Of FY 23-24

The National Bank for Financing Infrastructure Development (Nabfid), India's principal development financial institution (DFIs) for infrastructure financing, is planning to raise Rs 5000 crore as part of its maiden bond issue in first quarter of the next financial year, Rajkiran Rai G, its managing director said.

The funds will likely be raised through long-term infrastructure bonds, Rai added.

The Union Government set up Nabfid in 2021 in a bid to bolster long-term finance for infrastructure projects where the risks involved are usually beyond the acceptable limits of commercial banks and other ordinary financial institutions. The institution was set up via National Bank for Financing Infrastructure and Development Bill, 2021.

The Union Government will also provide guarantee at a concessional rate of up to 0.1% for Nabfid borrowing from multilateral institutions, sovereign wealth funds, and other foreign funds. Costs towards insulation from fluctuations in foreign exchange (in connection with borrowing in foreign currency) may be reimbursed by the government in part or full. On a case to case basis, the government may guarantee the bonds, debentures, and loans issued by NBFID.

Besides a grant worth Rs 5,000 crore, the union government has infused Rs 20,000-crore capital in to the DFI.

"Right now, we have Rs 25,000 crore in the kitty, we are comfortable for March,” Rai said during an event organised by Assocham.

Besides lending, NaBFID also plans to take equity stake in infrastructure projects.

Besides traditional sectors of infrastructure including roads, power etc, Nabfid will fund sectors like social infrastructure, data centres, along with a focus on developing and financing ESG sectors, ET reported Rai as saying

The infra financier has a loan pipeline of Rs 40,000-50,000 crore, which are under various stages of processing. Of Rs 50,000 crore, loans of around Rs 5,000 crore has been sanctioned and one disbursement of Rs 520 crore have happened so far, Rai said.

Nabfid has already commenced operations by lending Rs 520 crore along with a consortium of financial institutions to fund the Banihal Qazigund Road Tunnel in December.

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