How do you see the current credit environment? Are things too comfortable?

Yes, when things become too comfortable in banking and credit, people start believing nothing will go wrong. But cycles always turn. If institutions are not prepared, that’s when problems arise.

However, today regulators and organisations are better prepared. Risk management has improved significantly, and risk-taking is more controlled. That’s why, despite global upheavals, India’s financial system remains relatively stable.

How was the past financial year (FY26) for NaBFID?

FY26 has been a very strong year and effectively our first full year of operations. Earlier, we were still building manpower and technology. Our outstanding loan book jumped about 95 per cent year-on-year (yoy) to ₹1,16,950 crore as at March-end 2026 from ₹59,840 crore as at March-end 2025. In FY26, we sanctioned and disbursed loans aggregating to ₹1,33,020 crore (up about 31 per cent yoy) and ₹74,519 crore (94 per cent jump), respectively. So overall, it has been a good year. Total cumulative sanctions since FY23 is about ₹3.3 lakh crore.

Road and energy (mostly renewables and transmission) projects constitute 30–32 per cent and 35 per cent, respectively, of our overall loan book. These are well-established sectors and form the core of our portfolio.

What is the outlook for business in FY27?

Our loan book could reach close to ₹2 lakh crore by March-end 2027 from ₹1.17 lakh crore as at March-end 2026. Total expected disbursements this year will be about ₹80,000 crore.

We follow a balanced lending model: 50 per cent comprises operational assets (lower risk) and the rest is made of greenfield projects (higher risk, long-term growth). This ensures balance sheet safety. Greenfield projects have staggered disbursements over 2–3 years, so sanctions translate into disbursements gradually.

Which are the emerging focus areas for lending?

Urban infrastructure — comprising water supply, sewage treatment, solid waste management, urban mobility, healthcare and education — is a major future opportunity. Lending to this segment is currently on the lower side in our book but strategically important.

What differentiates NaBFID from other infrastructure financiers?

We offer long-tenor loans, with some going up to 30 years. This aligns repayment with project cash flows and reduces default risk. Sixty-six per cent of our loans have tenure greater than 15 years. We design repayment structures that can ride out the economic cycles. We bring private-sector efficiency with public sector mandate. We are a board-driven organisation, and have the ability to hire market talent and the flexibility to structure complex deals.

Is the mode of infrastructure financing in need of a change?

Banks should focus on greenfield funding. Operational infrastructure assets should move to the bond market after stabilisation. Bond markets should fund operational assets. This improves capital allocation efficiency across the system.

Given that the savings pattern is changing in India, with bank depositors exploring alternative avenues in a quest for higher returns, why are infrastructure projects unable to tap them for raising resources?

There is a structural shift in savings, with rising allocation to insurance, pension funds and provident funds. These funds now collectively manage about ₹120 lakh crore, growing at 15–18 per cent, faster than bank deposits. This creates a large pool of long-term capital.

However, insurance companies, pension funds and provident funds prefer safe investments due to regulatory restrictions. So, 97 per cent of their corpus is invested in either government securities or AAA bonds, or both. This limits returns for savers and restricts infra funding. So, we introduced a partial credit enhancement (PCE) facility (in September 2025), whereby we provide first-loss guarantee (20–50 per cent) and enhance the domestic bond credit ratings of lower-rated infrastructure companies and financial institutions (say, from BBB to AA). This will enable insurance companies, pension and provident funds to invest safely, helping channel long-term savings into infrastructure.

This is also aimed at broadening the investor base, reducing borrowing costs, and extending maturity.

How much funding does India need for the infrastructure sector annually? What is the scale of opportunity if the PCE product works?

While the required funding is about ₹30 lakh crore a year, we are able to tie up about ₹20 lakh crore. So, there is a gap of ₹10 lakh crore. Potentially, ₹5 lakh crore could flow into infrastructure bonds with the help of PCE from pension and provident funds and insurance companies. This would bridge a portion of the financing gap.

We are not just creating products, we are also building an ecosystem — connecting capital (pension/ insurance funds) with infrastructure project requirements, working with regulators to enable new frameworks, and developing bond markets. Essentially, we are connecting those who need money with those who have money.

How much more returns can PCE-backed infra bonds offer compared to government securities?

If government securities offer around 7 per cent returns, we aim to provide about 8.5 per cent with PCE. This extra return comes with a slightly higher risk, but is structured to remain attractive for savers investing through insurance and pension funds.