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The National Bank for Financing Infrastructure and Development (NaBFID) will finance projects that are part of the country’s Rs 6 trillon National Monetisation Pipeline.
The asset monetisation will free up resources that will come back to industry. There is large aggregate demand for resources, K V Kamath, chairman NABFID said addressing convention of Indian Construction Equipment Manufacturer’s Association in Mumbai.
The aggregate asset pipeline under NMP over the four-year period, FY 2022-2025, is indicatively valued at Rs six trillion. The top five sectors (by estimated value) capture about 83 per cent of the aggregate pipeline value. These five sectors include: Roads (27%) followed by Railways (25%), Power (15%), oil & gas pipelines (8%) and Telecom (6%).
Kamath said Bank with a capital base of Rs 20,000 crore will provide funding to projects in public sector as well as private sector. It will begin business by approving the first loan for the project in the first quarter of the new financial year (2022-23) beginning April 2022. At present, selection for key positions including chief executive officer (CEO) is under way.
Thw government owned funding agency is looking at lending of Rs 3-4 trillion in next three years or so. The emphasis in funding will be on having the righ sit tenor (loan period) and right price.
The funding environment has gone through change in last 20 years with emergence of institutions like insurance and pension funds which raise ling term liabilities. They need to deploy fund in the long term projects. The infrastructure projects provide that opportunities, he said.
Besides NaBFID, there will be more long term lenders. Commercial banks will step in when there are opportunities more so with arrangement for managing unforseen risks.
In the last three-four years, banks have cleaned up books, have healthy capital adequacy and non performing assets are less. Bank clients – corporates are also in much better shape with lower gearing levels, Kamath added.
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