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The National Bank for Financing Infrastructure and Development (NaBFID) will be operational in first quarter of FY23, according to KV Kamath, Chairperson.
“The governance structure is in place. The board structure is in place. The Board expansion should happen…,” he said at the 3rd Annual Finance Conclave organised by the Indian Construction Equipment Manufacturers’ Association.
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In October last year, veteran banker K V Kamath was appointed as the Chairperson of the NaBFID for three years.NaBFID has been set up by the government to support the development of long-term non-recourse infrastructure financing, including development of the bonds and derivatives markets necessary for infrastructure financing, and to carry on the business of financing infrastructure. The government last month had infused ₹20,000 crore into NaBFID.
The development finance institution (DFI) currently has a core team of about 25 people on secondment from various banks.
“The basic foundation of the bank has been built. The policy framework has been built. The selection of CEO and other leaders to run the Bank is under way,” Kamath said.
By next quarter, NaBFID would have built the foundation to start building the super structure and it should be on target to meet the aspirations of the Government as laid in terms of what they expect from the Bank, he added.
NaBFIN will finance the aggregate demand – the demand that has been put in for infrastructure development under National Investment Pipeline (NIP) and National Monetisation Plan (NMP). It will fund both private and public sector.
“I look at the Monetisation Plan as a continuum as money freed there will come back...
“Wherever there is a need, we will be available. The target, given the capital that was brought in by the government, that was set is ₹4-lakh crore (disbursal) over 4 years. At this point in time, the country needs speed of action in moving those projects which are shovel ready or gone beyond shovel ready…finance them and get them going.,” the NaBFID chairperson said.
Infrastructure investment
The NIP envisages an infrastructure investment of ₹111-lakh crore over the five-year period (FY 2020-25). The NMP has established a medium-term pipeline (of about ₹6-lakh crore in the FY22-25 period) along with a roadmap for “monetisation-ready” assets.
Kamath observed that there are long-term liability raising institutions such as pension funds and insurance companies that need to put the resources out as investment somewhere.
“These institutions are growing at a rapid rate. They are mobilising long-term savings and they need to deploy them long-term, say, in infrastructure. Then you have a virtuous cycle that is built in.
“We will raise money from the long-term pool which is now available ... This will enable NaBFIN to do long-term lending for, say 25-30 years, which could match, for example, the concession period the government is now talking about for various activities it does,” he said..
“Kamath emphasised that NaBFID has no constraints in terms of what type of loans it could give Further, it has no constraints in terms of what type of innovative financial instruments it could float. .
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