Govt wants its big banks to help their rival–the country’s youngest infra lender

livemint.com:

₹1 trillion through support from banks, two officials toldMint. The infra lender’s total capital as of 31 March was ₹28,560.8 crore. Although the discussions are not centred around any particular state-owned infrastructure lender, the move is expected to benefit NaBFID as it is the only development finance institution (DFI) created to fund long-term infrastructure, the officials said.

In March, NaBFID outbid State Bank of India, the country’s largest lender by assets, for a ₹9,000-crore loan to National Highways Authority of India’s infrastructure investment trust, making banks that typically dominate such projects take notice. But NaBFID’s lending capacity is limited by the rules governing it. The government’s plan comes at a time when the nation is attempting to upgrade its infrastructure at an eye-watering pace, investing trillions of rupees into building bridges, tunnels and waterways.

In its 2024 interim budget announced in February, the government earmarked ₹11.1 trillion for capital expenditure, or capex, 11.1% higher than the 2023 outlay. The finance ministry will present its full budget for 2024-25 on 23 July. “Infrastructure lending during the construction period is a concern and DFIs are not able to lend; with the increase in capital of DFIs, they will be able to lend during the construction phase, where banks are not willing to lend," said a senior government official, who did not want to be identified.

The official added that the plan is to ask banks with high capital adequacy ratio to invest in NaBFID. Discussions are on at various levels of the government on the percentage ownership of banks in NaBFID, which is currently wholly owned by the government, the official said. An email and a message sent to