The National Bank for Financing Infrastructure and Development (NaBFID) is poised to raise approximately ₹1 lakh crore in the current financial year. A significant portion, 30–40%, is slated to come from international markets, capitalizing on a special concessional swap window provided by the Reserve Bank of India (RBI).
Rajkiran Rai G., Managing Director of NaBFID, confirmed this strategic shift, stating that annual borrowings from overseas markets would increase to meet the substantial ₹1 lakh crore target. This move is designed to harness the RBI's initiative, which was introduced in June to bolster foreign currency reserves and facilitate external borrowings. While the window for FCNR(B) deposits has closed, the option for entities to raise Overseas Foreign Currency Borrowings (OFCB) and External Commercial Borrowings (ECB) remains open until December 2026, which NaBFID intends to utilize fully.
Driving Infrastructure Development Across India
The demand for infrastructure funding in India is escalating due to extensive development projects nationwide. NaBFID itself projects a loan book of ₹5 lakh crore by the fiscal year 2029–30. Key sectors fueling this demand include ports, shipbuilding, airports, multimodal logistics, high-speed corridors, and warehousing, all requiring substantial long-term capital.
Urban infrastructure development presents another major opportunity for investment. However, Rai noted that many municipal bodies face challenges in directly borrowing from capital markets, citing governance and capacity issues. Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey has also underscored the imperative to expand the municipal bond market to finance the immense capital needs for urban growth, emphasizing the need for improved municipal creditworthiness and transparent governance.
Bridging Long-Term Funding Gaps
NaBFID is actively engaged in an advisory capacity with approximately 100 urban local bodies to address these challenges. Rai also highlighted a critical need to bridge long-term infrastructure funding gaps and attract greater participation from institutional investors like insurance companies and pension funds. He explained that while commercial banks are adept at assessing and underwriting initial project risks, their short-term liabilities (typically 1–3 years) make them ill-suited for the 30–40 year tenures required by infrastructure projects.
This mismatch creates a vital role for long-term investors, such as insurance companies and pension funds, which seek investments with extended horizons. NaBFID aims to facilitate these connections, ensuring that projects receive appropriate long-term financing beyond their initial development phases.