NaBFID: The quiet powerhouse funding India's infrastructure boom

I wish more Indian people understood the positive impact NaBFID has brought about for India's infrastructure-building spree.

For those who don’t know, the institution was set up in 2021 by the Government of India as a development finance institution with ₹1 lakh crore of authorised capital, ₹20,000 crore paid up.

And so far: Over ₹3.03 lakh crore sanctioned, and almost ₹1.5 lakh crore disbursed by mid-2026.

But direct lending is the small idea here.

First, the problem it exists for.

An infrastructure project takes 15 to 20 years to pay back. But, most of the bank deposits mature in 1 to 3 years.

Funding the first with the second creates an asset-liability mismatch, and India has already lived through what that does. We tried it through the late 2000s and ended up with a twin balance sheet crisis that took a decade to clean up.

And that’s where it becomes interesting. Partial Credit Enhancement.

NaBFID provides a credit backstop on a bond issued by an infrastructure special purpose vehicle. That backstop lifts the bond's rating from 'BBB' or 'A' into 'AA' or 'AAA'.

Why does one letter matter this much?

Because pension funds and insurers, who hold exactly the 20-year money infrastructure needs, are only permitted to buy 'AA' and above.

The road did not become safer. The road became eligible.

That completely changes the multiplier.

* As a lender, one rupee of NaBFID capital funds one rupee of infrastructure

* As an enhancer, one rupee can unlock several rupees of private institutional money

The same logic is showing up elsewhere. InvITs and REITs have mobilised over ₹1.6 lakh crore since FY20, with net assets under management now around ₹6.4 lakh crore.

The plumbing is being laid quietly. And it has to be. Public capital expenditure has gone from ₹2 lakh crore in FY15 to a budgeted ₹12.2 lakh crore for FY27. The government cannot keep being the only cheque.

One honest note of caution, though. India's history with development finance institutions is not a happy one.

IDBI, ICICI and IFCI all either converted into banks or ran into serious trouble.

But, what looks different this time is intent. NaBFID appears designed to make a market rather than to be the market, with all lessons of the past taken care of.

So, I always pray that it scales and proves its merit, the way it has already proven its potential and impact.