The Government-owned National Bank for Financing Infrastructure and Development (NaBFID) expects its loan sanctions pipeline to swell to about ₹2 lakh crore by March-end 2025 against about ₹1 lakh crore as of March-end 2024.

To support loan growth, the development financial institution (DFI) is planning to mop up about ₹53,000 crore this year via bond market, bank and multilateral credit lines.

The All India Financial Institution was set up in 2022 under the NABFID Act, 2021, as the principal entity for infrastructure financing in the country

“We started our operations in December 2022. We sanctioned ₹18,560 crore in the January-March 2023 quarter and ₹83,280 crore in FY24. We crossed the ₹1 lakh crore (cumulative) loan sanctions mark in March 2024.

“Within this sanctions pipeline, about 35 per cent is for greenfield projects (predominantly in the power and roads segments) and 65 per cent is for brownfield (expansion) projects, refinancing existing infrastructure assets, lending to NBFCs (in the infrastructure space such as PFC and REC) and Infrastructure Investment Trusts (InvITs),” said Rajkiran Rai G, Managing Director.

Growing demand

Demand for infrastructure finance is gradually picking up, going by RBI’s data on sectoral deployment of credit. Scheduled commercial banks’ (SCBs) infrastructure loans portfolio increased by 6.5 per cent year-on-year (yoy) to ₹12,80,258 crore as on March 22, 2024, against 0.4 per cent growth to ₹12,02,605 crore as on March 24, 2023, per RBI data.

Rai emphasised that “For infrastructure project developers, there are two benefits of dealing with us – we can give long-tenor loans (80 per cent of our loans are of 15-25 years duration) and we can give loans at a fixed rate with a longer re-set period. Generally, loans have an annual re-set, but if somebody wants a longer re-set, we can give that. These are our strengths.”

NaBFID’s outstanding loan book as of March-end 2024 was around ₹36,000 crore against about ₹10,000 crore as of March-end 2023.

“Today, as we speak, our outstanding loan book has grown to ₹45,000 crore. By September 2024, we may touch about ₹60,000 crore– 70,000 crore. By March 2025, we are expecting disbursements to touch ₹93,000 crore. In the case of infrastructure loans, the disbursements are slow and happen in a phased manner,” Rai said.

The DFI had raised ₹19,500 crore worth of bonds (₹10,000 crore of bonds of 10-year tenor and ₹9,500 crore of bonds of 15-year tenor) in FY24 to support loan growth. It also has more than ₹10,000 crore of bank credit lines.

In a March 2024 rating report on NaBFID, ICRA said given the capital infusion (of ₹20,000 crore by the government), the bank remains well capitalised and geared for expanding its scale in the near to medium term, which could lead to a gradual increase in the leverage -- total debt/net worth (includes grants), which stood at 0.7 times as on December 31, 2023.

The rating agency expects that NABFID will benefit from its role of a dedicated and specialised financial institution for the development of the Indian infrastructure sector and will keep benefitting from its sovereign ownership, driving the Stable outlook on the long term “AAA” rating.