India infrastructure bank to start loan disbursements in FY23

By Bhakti Tambe

MUMBAI (Reuters) - India's National Bank for Financing Infrastructure Development, a development finance institution, may start disbursing loans from the current financial year, managing director and chief executive officer Rajkiran Rai G said on Wednesday.

Rai said the institution is also looking to raise money by issuing longer-tenure bonds of 10 to 25 year tenures in the domestic market this financial year but did not give any quantum or timeline.

There is no immediate pressure to raise funds and the agency is well-capitalised with initial capital of 200 billion rupees ($2.42 billion) and grants of 50 billion rupees, Rai said.

The National Bank for Financing Infrastructure Development is expecting ratings for its bond issuances by December.

He said the agency expects a strong appetite for long-term bonds, especially from pension funds and insurance companies, adding that these investors are looking to invest in long-term bonds to the tune of 2.5 trillion rupees ($30.22 billion) next year.

The government-owned funding agency will ensure the risk-pricing is correctly done on its bonds because investors will have to be rewarded for taking longer-tenure risks, Rai said. The agency will create its own benchmark for pricing its bonds.

Rai did not give any financing target as the agency is still in the process of crystallising its business plan and assessing the project pipeline.

The Indian government had announced the development of this financial institution in its February 2021 budget to finance nationally important infrastructure projects. Rai was appointed as MD in August and the agency is currently in the process of building a team.

The agency is looking to finance greenfield and brownfield projects and is also working with NIIF Infrastructure Finance on some projects.

($1 = 82.7140 Indian rupees)

(Reporting by Bhakti Tambe; Editing by Josie Kao)