NaBFID asked to develop domain expertise on infra

New Delhi: The central government has directed the National Bank for Financing Infrastructure & Development (NaBFID) to develop domain expertise so that it could evaluate and underwrite large and complex infrastructure projects.

The purpose of the directive is to preempt the cost and time overruns that still plague infrastructure projects. As in January, 431 out of 1,821 infrastructure projects worth Rs 150 crore or above suffered cost overrun escalation of over Rs 4.80 lakh crore.

Financing infrastructure projects has always been a tricky issue. There have been entities like IL&FS which went bust, hurting many projects which were underway and imposing a heavy cost on banks and the taxpayer. One factor that contributed to the mess was the lack of specialisation on the part of banks and financial experts regarding infrastructure and financing.

Cognizant of the pitfalls of the entering the infrastructure sector without requisite domain expertise, the government is taking no chances, official sources told Bizz Buzz, adding that it has directed NaBFID to create a data repository for the sector, complementing the National Infrastructure Pipeline and PM-Gati Shakti. The sources said it will crowd in private investment.

The Ministry of Finance has also asked NaBFID to work on a structured partial credit enhancement facility so that bond markets could be deepened. The Ministry is also keen on municipal bonds.

NaBFID began operations with a small team of deputed officials from a dozen institutions, both from the public and private sectors. It disbursed its first loan in December 2022. Till now, it has made total sanctions of more than Rs86,804 crore, with projects spread across the country and in many sub-sectors. It aims to sanction over Rs3 lakh crore by March 2026.

NaBFID is collaborating with many multilateral institutions for facilitating long-term credit lines, blended and concessional finance, technical assistance, knowledge sharing, etc.