The Indian government-backed National Bank for Financing Infrastructure and Development (NaBFID) expects to sanction close to 1 trillion rupees ($12.23 billion) in loans this financial year, its top executive told Reuters on Tuesday.
The infrastructure lender, which started operations last year, has sanctioned in-principle loans worth 450 billion rupees so far and is ready to disburse 230 billion rupees, said Rajkiran Rai, managing director of NaBFID.
"The initial set of approvals have been in the roads, renewable energy and transmission sectors."
NaBFID was set up as a development finance institution to help fill the gap in infrastructure financing after commercial banks withdrew from the space due to large defaults between 2010 and 2015.
The government hopes to speed up building infrastructure in the country and had identified 111 trillion rupees worth of projects to be financed in the five years through 2024/25.
NaBFID will lend into this pipeline, to a mix of greenfield and brownfield projects, while also participating in the monetisation of operational infrastructure assets, said Rai.
The federal government has put in 200 billion rupees, as initial capital, into NaBFID, which the institution will leverage. But, it intends to finance its lending via a mix of long-term bonds and bank loans.
NaBFID will raise about 300 billion through bond sales this financial year, with the first issue, of between 50-100 billion rupees, likely to hit the market in June, said Rai.
"Compared to earlier years, when infrastructure financiers struggled to raise funds from the bond market, the size of the insurance and pension fund market has grown, and these entities are looking to invest in long-term bonds," said Rai.
NaBFID will also raise funds from banks as needed and, over time, tap multi-lateral institutions, he said.
