The National Bank for Financing Infrastructure and Development (NaBFID) plans to raise USD 3-4 billion through external commercial borrowings, including loans and bonds, according to managing director Rajkiran Rai G. The infrastructure financier has already tied up USD 850 million as part of the planned overseas fundraising.
Rai said the institution is also preparing to issue bonds worth between USD 500 million and USD 1 billion. The issue is expected to have a tenure of around 10 years and could be launched by the end of September, subject to investor appetite. The final size has not yet been decided, but the issue is expected to be at least USD 500 million.
The fundraising comes as NaBFID seeks to increase its role in financing India's infrastructure requirements. In June, Rai had said the institution was looking to raise up to USD 2 billion through ECBs during the financial year and had begun exploring the market for a USD 500 million borrowing.
NaBFID's latest annual report also shows that the institution has been expanding its financing activities and accessing different sources of debt funding. The organisation continues to maintain AAA/Stable domestic ratings from ICRA, CRISIL and CARE, while India Ratings has assigned it an IND AAA/Stable rating.
Rai also said India needs to substantially increase the pace of infrastructure investment if it is to achieve its long-term economic growth targets.
The country currently invests around INR 20 lakh crore annually in infrastructure. According to Rai, this needs to rise to about INR 40 lakh crore every year. He said the overall infrastructure requirement over the next 20 years could be around INR 800 lakh crore, making a sustained increase in annual investment necessary.
He also pointed to the need for higher capital expenditure in manufacturing. According to Rai, India's growth pattern moved from agriculture towards services without building manufacturing at the scale seen in some other economies. While the services sector has played an important role in India's economic expansion, manufacturing investment now needs to increase alongside infrastructure spending.
Government measures such as the production-linked incentive (PLI) schemes are supporting manufacturing investment, but Rai said both manufacturing and infrastructure capex would need to increase substantially to support an annual growth rate of around 9 per cent.
He stressed that higher investment cannot be limited to a single year. Infrastructure and manufacturing spending would need to remain elevated over a sustained period if India is to maintain high growth and work towards its longer-term ambition of becoming a USD 30 trillion economy.
Rai also highlighted the growing pool of domestic long-term savings as an important source of capital for infrastructure and other long-duration assets.
He pointed to assets under management of pension, insurance and provident fund schemes at around INR 125 lakh crore. This is nearly half the level of scheduled bank deposits, while these long-term savings pools are growing at an estimated 15-20 per cent annually. In comparison, scheduled banks have been seeing liability growth of around 9 per cent.
According to Rai, this expanding pool of long-term savings could increasingly be directed towards infrastructure and other assets that require long-duration funding.
He also said traditional lending by banks and financial institutions alone would not be enough to meet India's infrastructure financing needs. Financial institutions would increasingly have to originate projects and then distribute the exposure among other investors rather than retaining the entire financing on their balance sheets.
Insurance companies, pension funds and provident funds are expected to become important contributors to the next phase of infrastructure financing. Greater participation from these institutions could also reduce the dependence on bank balance sheets for funding projects with long repayment periods.
Rai said this transition would require changes across the financial ecosystem, including possible regulatory changes, to enable different savings instruments to participate more actively in infrastructure funding.
The broader shift towards diversified sources of infrastructure finance is already gaining attention. NaBFID has been working on expanding its role beyond conventional lending, including advisory and transaction-related services for infrastructure projects. Its recent work with state and city infrastructure authorities is also aimed at developing financing structures and attracting private capital.
Source PTI