NaBFID to launch first credit-enhanced bond within 30 days

The National Bank for Financing Infrastructure and Development (NaBFID) will issue its first credit-enhanced bond in the next month, according to Managing Director, Rajkiran Rai G.

NaBFID has sanctioned about ₹2.5 lakh crore worth of projects and is building a pipeline, as disbursements in infrastructure typically take one to three years. Rai explained that the process of credit enhancement requires coordination with rating agencies to move issuers “from A to AA, AA plus kind of thing.”

The institution plans to handle ₹50,000–60,000 crore of issuances in the first one to two years and expects other players to join once the product is accepted by the market. Rai said, “We will be only the catalyst for this. We may not have the capacity to do four, five lakh crores.”

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He highlighted that banks currently account for ₹13 lakh crore of the total ₹33 lakh crore exposure to infrastructure, while non-banking financial companies (NBFCs) and NaBFID together have grown their share to ₹19 lakh crore. With defaults dropping to 0.3%, he sees room for banks to increase exposure.

NaBFID is also preparing to tap pension and insurance funds, which lack credit-risk assessment capabilities. “That is where the credit enhancement comes in, because the credit risk is underwritten by scheduled banks… and then the insurance and pension come with the investment,” Rai said.

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The bank is working with multilateral institutions to reduce the costs of credit enhancement and attract blended finance through GIFT City. By 2027, NaBFID expects its balance sheet to reach ₹2 lakh crore, with overall infrastructure finance in India growing at 10–12%.

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