Banks wake up to competition as young infra lender flexes muscles
₹9,000 crore loan, two bankers aware of the matter said. While SBI, India's largest bank by assets, pitched 8.2% for a proposal by National Highways Authority of India’s (NHAI) infrastructure investment trust (InvIT) to raise ₹9,000 crore, NaBFID offered 8%. “This made other lenders come to the negotiating table," one of the two bankers cited above said.
The one-year NaBFID Lending Rate (NLR) — its benchmark rate — was at 8% in March, as per its website. It has since been raised to 8.2%. Ultimately, the NHAI InvIT loan was sanctioned jointly by NaBFID and the other banks at a rate closer to 8%.
Emails sent to NaBFID, NHAI and SBI remained unanswered. According to one of the two bankers cited above, NHAI's InVIT has been borrowing from banks led by SBI for the past couple of years. InvITs are collective investment vehicles to monetize infrastructure assets.
A second banker said the NHAI loan was made to the InvIT which has toll-earning assets. Moreover, NHAI’s credentials ensure it gets some of the finest pricing on bank loans. “For banks, it is a challenge to finance such long-duration projects because most loan agreements by commercial banks in project finance have a clause for refinancing after seven to 10 years, whereas a development finance institution like NaBFID can sanction even 30-year loans," the banker said.
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