Banking Sector Reforms

NaBFID to Boost Infrastructure Financing


From UPSC perspective, the following things are important :

Prelims level: NaBFID

Mains level: Not Much

Central Idea

  • The National Bank for Financing Infrastructure & Development (NaBFID) is making significant strides in infrastructure financing, with ambitious goals for loan disbursement and expansion.
  • Operational for less than a year it has already made substantial progress in lending and aims to further strengthen its presence in the infrastructure sector.

What is NaBFID?

  • The NBFID was established in 2021 through the enactment of The National Bank for Financing Infrastructure and Development Act, 2021.
  • It serves as a specialized Development Finance Institution (DFI) in India.
  • Its primary objectives include addressing the gaps in long-term non-recourse finance for infrastructure development, strengthening the development of bonds and derivatives markets in India, and fostering sustainable economic growth.
  • The Reserve Bank of India (RBI) will regulate and supervise NBFID as an All-India Financial Institution (AIFI).
Development Finance Institutions (DFIs): They are government-owned or public institutions that provide funding for infrastructure and large-scale projects. They play a crucial role in financing projects that are often unviable for traditional banks to lend to. DFIs offer two types of funds: Medium-term funds with a maturity period of 1-5 years, and Large-scale funds with a maturity period exceeding 5 years.


Loan Disbursement and Expansion Targets

  • Disbursement Target: NaBFID aims to disburse approximately ₹60,000 crore by the end of this fiscal year, showcasing its commitment to fostering infrastructure development.
  • Sanctioning Loans: NaBFID is poised to sanction loans amounting to ₹1 lakh crore during this fiscal year. These loans will be directed towards both greenfield and brownfield assets in the vital infrastructure space.
  • Debt Raise: Recently, NaBFID successfully raised ₹10,000 crore through debt issuance, signalling the institution’s ability to attract substantial funding.
  • High Demand: The debt issuance received an overwhelming response, with bids worth ₹23,629.50 crore, nearly five times the base issue of ₹5,000 crore.
  • Largest Debt Issuance: The debt securities, with a 10-year tenor, mark the largest debt issuance by a national-level institution.


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