The infrastructure lender has also sought permission from the regulator to offer this product, NaBFID deputy managing director said. Samuel Jose Jebaraj ET customs.
“We are in talks with the Reserve Bank of India “Credit enhancement is a viable product. One suggestion is to reduce the capital requirement for financial institutions offering credit enhancement, which would make the product more attractive,” he said, adding that they are hopeful that the RBI may issue revised guidelines in the next two to three months.
Credit enhancement involves lenders providing collateral to improve the credit ratings of bonds issued by companies, allowing them to access funds from the bond market on better terms. Lenders must set aside capital for credit enhancement, which varies depending on the bond’s rating.Reducing capital requirements will help financial institutions provide collateral for more bonds and also reduce the guarantee fee, which will encourage more companies to use the product.
Following a review meeting earlier this year, the finance minister Nirmala Sitharaman Jebaraj recommended that NaBFID introduce a structured partial credit enhancement facility to deepen bond markets, including for local bodies and urban municipalities. He also asked the infrastructure lender to develop sectoral specialisation and a unique capability to assess and underwrite large and complex infrastructure projects. Jebaraj said they are looking to further develop securitisation of infrastructure assets.
“Our aim is to develop an ecosystem where various infrastructure projects can be pooled, which will enable us to issue transfer certificates of different tranches and tenors to investors such as insurance and pension funds,” he said, noting that at present, asset pooling is being done through other formats such as InvITs and restricted pool structures.
NaBFID, which has raised around ₹28,000 crore, has evaluated over 200 projects and will approve over ₹3 lakh crore by March 2026.
Created in 2021, it is a financial institution specialized in development that supports the country’s infrastructure sector by reducing the financial gap. It is also creating a data repository for the infrastructure sector, which complements the National Infrastructure Gas Pipeline and PM-Gati Shakti.
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