NaBFID to fund projects in Rs 6 trillion asset monetisation pipeline
- IBEF
- March 16, 2022
The National Bank for Financing Infrastructure and Development (NaBFID) would fund projects under the country's Rs 6 trillion (US$ 79 billion) National Monetisation Pipeline. Asset monetisation will release funds that will be returned to industry. The top five sectors (in terms of anticipated value) account for around 83% of the total pipeline value. Roads (27%), railways (25%), power (15%), oil and gas pipelines (8%), and telecommunications (6%) are the five sectors.
The bank, which has a capital base of Rs 20,000 crore (US$ 2.61 billion), would support both public and private sector projects. It will commence operations by authorising the project's first loan in the first quarter of the next fiscal year. In the next three years, the government-owned financial agency plans to lend Rs 3-4 trillion (US$ 39-52 billion). The focus in terms of finance will be on finding the proper tenor (loan term) and pricing. Banks have cleaned up their books in the previous three to four years, have sufficient capital adequacy, and have less non-performing assets. With lower gearing levels, bank clients - corporates are also in much better situation.
In the last 20 years, the funding environment has changed due to the advent of organisations such as insurance and pension funds that create long-term obligations. They must invest funds in long-term initiatives. There will be more long-term lenders than NaBFID. When there are chances, commercial banks will step in, especially if there are arrangements in place to manage unforeseeable risks.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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