NaBFID plans to lend Rs 15,000 cr to infra projects this quarter

Mumbai: The National Bank for Financing Infrastructure and Development (NaBFID), the newest development finance institution (DFI) to start lending last month, expects to advance ₹15,000 crore to infrastructure projects this quarter, CEO Rajkiran Rai said. The lender commenced operations by lending ₹520 crore along with a consortium of financial institutions to fund the Banihal Qazigund Road Tunnel in December.

Rai said the company already has a loan pipeline of ₹50,000 crore, which it expects to increase next fiscal.

With the appointment of IDBI Bank's J Samuel Joseph last month, NaBFID now has all three deputy managing directors (DMDs) in place. Joseph will be in charge of lending & project finance for the financial institution. Former Union Bank of India executives Monika Kalia and BS Venkatesha have already taken over as the chief financial officer and chief risk officer, respectively.

"We have disbursed our first loan of ₹520 crore in December 2022 for an NHAI annuity project in Jammu & Kashmir, wherein NIIF is the investor. Our loan pipeline is ₹50,000 crore and we expect to disburse ₹15,000 crore this quarter," Rai said.

Rai said NaBFID will be different from past infrastructure finance institutions because it will play the role of a market maker and also include project advisory and policy advocacy.

"NaBFID aims to go beyond traditional sectors (like roads, power etc. where most of the financing has happened in the past) to sectors like social infrastructure, data centres, along with a focus on developing and financing ESG sectors," Rai said explaining the difference between NaBFID and previous infra finance companies which could not cope with the long gestation infrastructure financing.

Besides lending, NaBFID can also take equity stake and more uniquely can also lean on the government for a sovereign guarantee on paying a 0.01% fee, allowing it to raise loan-term funds at a cheaper rate.

The majority of the company's borrowings will be in the form of bonds. NaBFID plans to raise ₹5,000 to ₹10,000 crore by issuing five-year bonds for the first time within the next few months. However, going forward, the company plans to issue longer tenure bonds mostly in the 20-25 years maturity bracket because of focus on financing long gestation infrastructure projects.

"The government has infused ₹20,000-crore capital into our company which is enough for us to increase our loan book to ₹4 lakh crore. We have a multidimensional role in infrastructure financing and also have a role to develop local markets and help institutions to raise funds," Rai said.

NaBFID is only the fifth DFI after the EXIM Bank, National Bank for Agriculture and Rural Development (Nabard), National Housing Bank, and Small Industries Development Bank of India. Rai said besides financing infrastructure, the company also plans to help local municipal corporations raise funds through the bond market by helping them streamline their accounting and providing expertise to raise public funds.