NaBFID is not looking for equity investment; we are adequately capitalised, says MD Rajkiran Rai

Rajkiran Rai G

National Bank for Financing Infrastructure and Development (NaBFID) is not looking for any equity investment as of now, its managing director, Rajkiran Rai told Moneycontrol in an exclusive interview.

"As of now, NaBFID is not looking for equity investment because we have sufficient equity,” Rai said.

Rai during an interview also said that the company does not rule out the possibility of equity investment going forward. Edited excerpts:

I think it is not right to say different views; basically, regulators will look from the risk perspective because particularly since any sector which is growing fast, generally the regulator has to take that call, so that we do not build bubbles or risk in the system. I think the need of the economy is that infrastructure should grow, everybody is aligned with that thought.

Very happy because this can be one of the quickest ramp-ups for a new institution. If you see, our operations started in December and my first recruitment happened in October 2023, so till then I was working with a set of 30 to 40 people drawn from various banks and institutions on deputation. With that team, we could deliver so much. October 2023 onwards, our regular recruitment started. Now we have onboarded close to about 140 people, so now NaBFID has grown.

Now we have seen that we have picked up momentum doing everything. But it can be easily one of the quickest ramp-ups for an institution and we should see NaBFID, not only as a financing institution, because many times people talk about how much you have sanctioned and all that. So it will be an injustice to us if you only measure us on how many loans we have sanctioned and all that because there is a whole developmental mandate. Now the whole discussion is hovering around NaBFID today, whether it is coming from SEBI or the Reserve Bank or the government, because the whole ecosystem, the infra financing or project financing, is not a simple bank loan business.

So now that kind of evolution which has happened in other economies also has to play out here. So we are studying all that and NaBFID is playing the role of the developmental institution. So whether we are talking about partial credit arrangement, blended finance, data repository, or secondary market development for the bond market, these are the multiple roles actually, which NaBFID is working on.

Our role is mainly on infra. Now, in any growing economy, infra investment becomes a very important element because you will not achieve the status of Viksit Bharat by 2047 unless you invest heavily in infra, as infra improves the quality of life and efficiency.

Any infra you use every day, whether it is electricity, road, logistics, movement of goods, everything, ultimately, the underlying thing is infra. The country will not reach the developed status without the infra investment. Now, what happens is 80 percent of the investment is done by the government today because private investment has not picked up to that level. So now, can we continue to depend on the government to pick up that speed and volume? No, because the government has a limitation, because there are multiple areas which demand their attention. So now, they are doing that initial work of putting that capital in, so that we kickstart.

Now, it is our role to crowd in investment. So that, whether it is foreign funds, domestic funds and all that, so that infra gets the funding that is needed, and actually we grow at a much bigger phase. We need that investment to come into infra. So all the enablers are needed.

Our disbursement has crossed Rs 50,000 crore so far. Our sanction book as of now is about Rs 1,20,000 crore. In project financing, disbursements are lagging so, that way Rs 1,20,000 crore is the sanction book. We expect to cross Rs 2,00,000 crore of sanctions by March 2025.

My March book was around Rs 30,000 crore. Now, this March, I will be around Rs 93,000 crore, as per the estimates in terms of disbursements.

We are doing all infra projects. We have funded more than 12 kinds of infra as of now, including ropeways and ports. Other segments are small but a major chunk of our advance, as of now, is in the road sector and energy sector.

As of now, NaBFID is not looking for equity investment because we have sufficient equity. We will not rule out the possibilities going ahead. But at this point of time, yes, we are adequately capitalised. We are 100 percent owned by the government and it also depends on the government.

We have thought of Rs 53,000 crore of bond borrowing this year. It can change. It is very dynamic. Of the total, we have already raised Rs 9,000 crore through the local bond market.

We are not planning any overseas bond issue because at this point of time, domestic is cheaper compared to the hedging cost and all that.

Partial credit enhancement is a product which is already available in the system. It is not a new product. We are working on that product. Actually, what we do is, we enhance, like suppose if it is an A-rated entity, we will make it AA+, so that investors can come in and invest, actually. That is a rating enhancement. Credit enhancement is nothing but improving the rating, so that they are capable of going and raising the money.

So, now, actually, as a product, we are building that requirement. Because we have to study the company where we are doing the credit. If it is a municipality, it is a municipality.

I have to do credit due diligence, like I have to see all risk factors before I do that. Whereas, when it comes to municipality bonds, it is much safer because there is a government backing there and all that.

If the same rules come in, the cost of borrowing may go up by 0.5 percent to 0.7 percent is a rough estimate.