NaBFID to Issue First Credit-Enhanced Bond in October

The National Bank for Financing Infrastructure and Development (NaBFID) will issue its first credit-enhanced bond next month, Managing Director Rajkiran Rai G confirmed in an interview with CNBC TV18. The initiative aims to strengthen India’s infrastructure financing framework and expand participation from institutional investors such as pension and insurance funds.

Credit-Enhanced Bond Launch

NaBFID has sanctioned about ₹2.5 lakh crore worth of projects and is building a strong pipeline. Rai explained that the process of credit enhancement involves working with rating agencies to help issuers move “from A to AA, AA plus kind of thing.”

The institution plans to manage bond issuances worth ₹50,000–60,000 crore within the first one to two years. Rai added that NaBFID will play a catalytic role, encouraging other institutions to participate once the product gains wider market acceptance.

Infrastructure Financing Landscape

Currently, banks account for ₹13 lakh crore of the total ₹33 lakh crore exposure to infrastructure projects. Non-banking financial companies (NBFCs) and NaBFID together have expanded their share to ₹19 lakh crore. With defaults dropping to just 0.3%, Rai sees significant scope for banks to scale up their exposure in the sector.

This development comes at a time when infrastructure financing is critical to sustaining India’s economic growth, particularly in sectors like transport, energy, and digital connectivity.

Attracting Pension and Insurance Funds

NaBFID is also focusing on tapping pension and insurance funds, which often lack the expertise to conduct credit-risk assessments. “That is where the credit enhancement comes in, because the credit risk is underwritten by scheduled banks… and then the insurance and pension come with the investment,” Rai said.

By offering credit-enhanced instruments, NaBFID aims to create a safe investment avenue for long-term funds, thereby diversifying the investor base in infrastructure finance.

Partnerships and Future Outlook

The bank is working with multilateral institutions to lower the cost of credit enhancement and bring blended finance through GIFT City. According to Rai, these partnerships will play a vital role in making infrastructure bonds more affordable and attractive to global investors.

Looking ahead, NaBFID expects its balance sheet to expand to ₹2 lakh crore by 2027, with overall infrastructure finance in India projected to grow at an annual rate of 10–12%.

Read More: State Bank of India Lists $500 Million Bonds on NSE IX After India’s Rating Upgrade

Conclusion

NaBFID’s move to issue its first credit-enhanced bond marks a significant step in deepening India’s infrastructure financing market. By combining credit enhancement with institutional investor participation, the bank is positioned to become a key driver of growth in the sector while helping reduce risks and improve liquidity.

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. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.