Finance Ministry has notified concessional rate of fees on government guarantee for National Bank for Financing Infrastructure and Development (NaBFID).
According to notification, “The concessional rate of fees for government guarantees applicable to the Institution shall be 0.1 per cent, for borrowings from multilateral institutions, sovereign wealth funds, and such other foreign institutions as may be specified, by notification, by the Central government.” This rate could be reduced for government guarantee, in respect of borrowings to be availed by the Institution for the purposes mandated to the Institution by the Central government, and the Institution shall submit a request to the Central government including the details of the borrowings, the parties involved, and the intended use of the borrowed funds.
Further, the guarantee fee shall be payable by the Institution at the time of securing the government guarantee and thereafter every year, on April 1. “The government guarantee fees shall be subject to other conditions imposed by the Central government,” it said. Established in April 2021. NaBFID is dedicated to accelerating the development of India’s infrastructure ecosystem by addressing the long-term financing needs of the sector. It aims to be a key partner in helping India achieve its ambitious infrastructure development objectives – responsibly and sustainably. Additionally, it will work towards developing a deep and liquid market for bonds, loans, and derivatives for infrastructure financing.
Timing of this notification is important as only last week, two global agencies, Moody’s Ratings and Fitch Ratings assigned international credit ratings. Moody’s Ratings has assigned a credit rating of Baa3 (Stable), while Fitch Ratings has assigned a rating of BBB-(Stable). These ratings are at par with India’s sovereign rating and reflect the institution’s robust financial position, strong governance framework and sound risk management practices.
This milestone marks a significant step in institution’s growth journey and underscores the institution’s commitment to transparency, financial discipline and global standards. The assessments by Moody’s and Fitch provide international investors and stakeholders with an independent and globally recognised evaluation of the company’s creditworthiness, NaBFID said.
Commenting on the rating assignment, an industry expert said, “Receiving international credit ratings from Moody’s and Fitch is a testament to our institution’s financial strength and strategic vision The ratings assigned by both agencies are at par with India’s sovereign rating and highlight the important policy role the institution plays in India’s infrastructure sector”. With these ratings, institution is now well-positioned to raise offshore funding on more favourable terms, aligning with the institution’s broader funding and growth strategy, he added.
