Sagarmala Finance Corporation Set to Begin Lending to Maritime Sector

Sagarmala Finance Corporation Limited (SMFCL), a non-banking financial company dedicated to the maritime sector, is moving closer to commencing lending activities. 

The organisation has begun engaging with coastal states and maritime authorities to identify potential projects.

Its initial operations are expected to prioritise public-sector supported initiatives, alongside efforts to raise funds and manage borrowing costs.

Engagement With Coastal States and Maritime Boards

SMFCL has initiated discussions with several coastal states and their maritime boards to explore lending opportunities. 

Preliminary agreements linked to projects valued at more than ₹3.5 lakh crore have already been signed, providing a potential pipeline for future financing once lending formally begins.

Planned Lending Approach

The corporation intends to adopt a cautious lending strategy in the early stages. Initial financing will be directed towards projects that have backing from state or central government entities. This approach is aimed at limiting risk exposure while establishing lending operations in the maritime domain.

Existing Investments and Capital Structure

Before becoming a dedicated NBFC, the entity operated as Sagarmala Development Corporation Limited. 

During this phase, it made equity investments in port-linked rail infrastructure projects, including stakes in the Haridaspur–Paradip and Krishnapatnam railway companies. 

As of March 31, 2024, its equity investments stood at ₹541.79 crore, against an authorised and paid-up capital of ₹1,000 crore.

Fundraising Plans and Cost of Borrowing

SMFCL plans to raise around ₹8,000 crore during the current financial year and has held discussions with both public and private sector banks, as well as other financial institutions.

Management expects borrowing costs to ease following recent policy measures, although market conditions continue to reflect global uncertainty., as per news reports.

Intended Areas of Financing

The organisation has been tasked with providing tailored financial products across short-, medium-, and long-term tenures. 

These offerings are expected to support port authorities, shipping companies, MSMEs, start-ups, shipbuilding activities, and maritime education institutions. 

The company is also exploring the formation of lending consortia for larger projects.

Read More: RBI’s New Lending Rules Bring Flexibility for Borrowers and Banks.

Conclusion

Sagarmala Finance Corporation’s move towards starting lending operations represents a step in expanding financial support for India’s maritime sector. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.