(Bloomberg) -- India’s National Bank for Financing Infrastructure and Development (NaBFID) is planning to disburse $17 billion in local currency loans this year and next to finance various long term projects, a top executive said.
“The next two-three decades will be a large infra play for the country,” Samuel Joseph Jebaraj, deputy managing director, lending and project finance at the government-backed lender told Bloomberg Television in an interview on Tuesday. “As of now we spend 3.4% of our GDP on infrastructure which needs to be increased to 5% or 6% going forward.”
The 20-month old financial institution, which has been created to focus on infrastructure funding, has assessed 200 projects and is planning to sanction $26.5 billion in loans over two years, Jebaraj said. Approval or sanctioning of a loan is one of the final steps before disbursement.
Prime Minister Narendra Modi’s mission to build everything from airport and power facilities to roads, bridges and tunnels will spur India’s infrastructure investment to 15 trillion rupees ($179.2 billion) by March 2026, according to Crisil Ratings. His government has made improving India’s creaking infrastructure the cornerstone of his plans to boost economic growth.
NaBFID’s exposures are spread across roads, power, ports, telecoms, gas distribution within cities, logistics and warehouse, Jebaraj said. There is also a huge demand for funding renewable energy as steel, aluminium and cement manufacturers shift to greener sources to meet export norms, he said.
The lender has raised 280 billion rupees via bonds over the past 14 months via issuance of 10-,15-, and 20-year debt, Jebaraj said.
“It makes sense for us to lend fixed rate which is also the requirement of infra players as they don’t have a hedge against inflation,” he added.
--With assistance from Subhadip Sircar, Paul Allen, Avril Hong and Anand Menon.
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