NaBFID is supporting municipal corporations with access to capital market, says MD Rajkiran Rai

Rajkiran Rai G

In order to bridge the urban infrastructure financing gap, National Bank for Financing Infrastructure and Development (NaBFID) - a Development Finance Institution (DFI) - is helping the municipal corporations access capital markets and improve financial health, managing director Rajkiran Rai said in an interview with Moneycontrol.

Municipal corporations usually have a weak credit profile and irregular revenue, hence they struggle to raise funds for developmental work. NaBFID has stepped in to lend support to these entities.

"We see ourselves as long-term partners to municipalities. By anchoring their entry into capital markets and supporting financial reforms, we’re building a foundation for sustainable urban infrastructure," Rai said.

NaBFID has acted as an anchor investor in several recent municipal bond issuances, providing much-needed support. This move has not only helped urban local bodies raise capital at competitive rates, but has also attracted private institutional investors who were previously reluctant to enter the segment, Rai said.

"Our participation reassures the market that due diligence has been done. It de-risks the issuance and encourages broader participation," Rai added.

In recent months, multiple urban bodies, including tier-II cities, have successfully closed bond issuances for infrastructure projects like water supply augmentation, sewage treatment, and urban transport, with NaBFID playing a strategic underwriting role.

From 2017 till date, just 16 issuances have happened amounting to Rs 3,134 crore.

Another core area of NaBFID’s intervention is in project structuring and preparation, especially through Public-Private Partnerships (PPPs). Recognizing the limitations of direct borrowing for many urban local bodies, the institution is helping municipalities tap into innovative, blended financing models.

Waste-to-energy, sewage treatment plants and climate-resilient infrastructure are among the key sectors being targetted. By supporting municipalities in preparing Detailed Project Reports (DPRs), conducting viability assessments and bringing in private partners, NaBFID is enabling projects that are otherwise difficult to fund through traditional municipal budgets, Rai said.

“PPPs are essential where municipal balance sheets alone can’t carry the investment load. Our role is to make these projects viable financially and environmentally,” Rai said.