NaBFID plans debut overseas fund raise of up to $1 billion, official says

India’s National Bank for Financing Infrastructure and Development is considering raising up to $1 billion in its debut overseas borrowing this fiscal year, as it looks to diversify funding sources, a senior official said on Thursday.

The state-run infrastructure lender could raise funds through external commercial borrowings or dollar bonds, “depending on interest rate conditions”, Managing Director Rajkiran Rai G said in an interview.

“We are looking to tap the overseas market… for the first time in FY26 simply to expand our borrowing sources.”

Indian Prime Minister Narendra Modi-led government has made infrastructure a cornerstone of its economic strategy.

Mumbai-based NaBFID, which started operations in fiscal year 2023, had sanctioned loans worth over 2 trillion rupees through March-end, and aims for loan sanctions of 1.2 trillion rupees by the end of this fiscal year, Rai said.

The lender funds infrastructure projects for long durations, with over 65%-70% of loans exceeding 15 years. The firm, which lends at floating rates but borrows at fixed rates, has hedged about 70% of its bond borrowing using interest rate derivatives, Rai said. Derivatives are primarily available for tenures of up to 10 years, limiting the feasibility of the firm issuing so-called ultra-long-term bonds, the official said.

NaBFID has borrowed around 80 billion rupees in the local bond market so far this fiscal and plans to raise another 350 billion rupees to 400 billion rupees before the fiscal year ends in March, according to Rai.

Last fiscal, the firm borrowed 169 billion rupees through bonds, as per Reuters data.

NaBFID is working with multilateral institutions like the World Bank and Asian Development Bank to develop tools like credit enhancement for infrastructure bonds, Rai said. ($1 = 86.5040 Indian rupees)