National Bank for Financing Infrastructure Development to disburse first loan in FY23; looking to raise funds via bonds

The National Bank for Financing Infrastructure Development is planning to disburse its maiden loan in FY23, and it may raise capital from the bond market before the end of the fiscal, a top official said on Wednesday.

The development finance institution, created to aid in the ambitious infrastructure building targets, is currently involved in assessing various projects across sectors including roads and renewable energy, its managing director and chief executive Rajkiran Rai told reporters here.

The platform, which is committed to long-term lending, will look at raising long term liabilities through bond issuances with tenors of up to 25 years, Rai said speaking on the sidelines of the annual FIBAC conference of bankers here.

He estimated that pension funds and insurers have an investible corpus of Rs 2.5 lakh crore, which will be tapped by the newly created DFI to raise its resources.

Rai, who took over as the head of the body recently after heading a state-run bank for five years, however, said that NaBFID is not short on resources right now, courtesy the support from the government which includes Rs 20,000 crore in capital and Rs 5,000 crore in grants.

It will start raising money primarily through bond issuances once its lending operations start, Rai said, adding that it will also be looking at raising capital from retail investors as has been demonstrated by the National Highways Authority of India recently.

He said the DFI may fund infrastructure investment trusts in the future, helping such vehicles with needs for debt.

It is also looking at working closely with the National Investment and Infrastructure Fund, which primarily takes equity bets on projects. He said that while NIIF has done a lot of innovative things, the 2015-started platform has not moved as fast as it should have.

Rai said there is no dearth of project pipeline in the infrastructure sector, but there is a need for making projects more "bankable", which are backed by right documentation and studies to up a lender's interest.

Click Here For Latest Updates On Stock Market | Zee Business Live

He also rued that a lot of the concentration of finance is in the roads sector, adding that critical sectors like railways has not received the necessary traction.

Speaking at the same event, ratings agency Crisil's managing director Gurpreet Chhatwal said the bond market is not helping fund the infrastructure projects in the country and there is a perception problem where long-term investors like pension and insurance companies stay away from such commitments due to sour experiences in the past.

Rai said that NaBFID's mandate is not limited to financing projects alone, and it will also be performing the role of developing the infrastructure finance ecosystem by helping crowd-in investments.

It has a team of 30 people at present, which will grow to 50 in a month's time and will be 150-strong by the end of next year, he said.