National Bank for Financing Infrastructure and Development (NaBFID) is likely to start disbursing or committing funds to infrastructure projects in FY23, MD and CEO Rajkiran Rai G said, adding that it may also issue its first bond this financial year.

The development finance institution, which began operations this year, is waiting for its rating process to be completed by December, following which it can begin its funding operations.

It is currently well capitalised with an initial capital of ₹20,000 crore and grants of ₹5,000 crore, Rai said.

Owing to this, NaBFID is in no rush to issue bonds to raise funds for initial disbursements, Rai said, adding that however once it starts disbursing funds, it might look to issue long-term bonds this fiscal itself.

Rai was speaking on the sidelines of a banking conference organised by FICCI and Indian Banks Association in Mumbai on Wednesday.

Saying that infrastructure projects require long-term financing, which currently banks and private companies are unable to provide, Rai added that NaBFID will have the advantage of being able to provide long-term funding of up to 30 years.

Besides banks, the institution is hoping to fund its long-term bonds through insurance and pension funds which typically look for long-term investment, Rai said, adding that in 2023 the demand for long-term bonds is estimated to be ₹2.5 lakh crore.

It will also look to extend participation to retail investors as well as fund projects through InvITs (infrastructure investment trusts).

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Rai said that NaBFID is in advanced stages of discussions and has identified a project pipeline across sectors such as solar, wind, electric transmission, railways, traditional energy, ports and airports, adding that it will also be working with NIIF Infrastructure Finance on certain projects.

He added that the lending rate will be in-line with what major banks are offering, but that it might charge a certain premium towards the added benefit of long-term funding and higher reset value.

Rai said that NaBFID currently has a team of 30 people which is expected to go up to 50 in a month and 150 by the end of next year, as the institution looks to build specialised teams and verticals for various investment avenues.

“This (infrastructure) will be one of the best asset classes the way it is shaping up, and the size that we are looking at,” Rai said, adding that there will be increased interest across investment segments—banks, financial institutions and retail investors.

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