Nabfid must now focus on urban local bodies, says DFS secy M Nagaraju

Addressing NaBFID's infrastructure conclave, Nagaraju said the institution should work on new instruments at scale so that banks can rebalance their portfolios every three to five years

Alongside funding for power and road projects, the National Bank for Financing Infrastructure and Development (Nabfid) should now scale up support for urban local bodies to strengthen city infrastructure and build a talent pool, said M Nagaraju, secretary of the Department of Financial Services, Ministry of Finance, on Thursday.

 

Addressing Nabfid’s infrastructure conclave, Nagaraju said the institution should develop new instruments at scale so that banks can rebalance their portfolios every three to five years while crowding in institutional capital.

 

Nabfid, a government-owned financial institution operational for three years, has already laid a strong foundation by cumulatively sanctioning over ~2 trillion. Around three-fourths of its loans have maturities of 15 years or more, providing the patient capital needed to make large projects viable, he said.

 

 

The institution has expanded its reach to 17 of the 37 infrastructure sub-sectors and launched a partial credit enhancement product to deepen the bond market. Nagaraju said the next phase should move from proof of capability to system-shaping impact.

 

He outlined expectations for Nabfid’s future direction, saying the infrastructure (infra) financier should act as a cross-sector advisor, willing to shoulder selective early-stage risks so that promising concepts become bankable projects. This approach can create a robust pipeline that commercial banks and long-term investors are ready to finance.

 

He added that Nabfid should develop deep specialisation in priority sectors like urban development. By 2027, infra capital requirements will be highest in urban sectors. The institution can set standards with bespoke risk models, detailed project report (DPR) checklists, model contracts, and viability programmes that share revenue risk and ensure the availability of basic payments.

 

Nagaraju said that Nabfid could deepen engagement with states and urban local bodies, a step he described as crucial for the financial sector. The bank could take the initiative to prepare DPRs, strengthen bankability through escrow, user charges, and layered grants, and, finally, leverage technology and data as multipliers.