NaBFID taps WB, ADB for infra projects

In talks with agencies on counter-guarantees for credit enhancement to infrastructure projects

- ABHIJIT LELE

The National Bank for Financing Infrastructure and Development (NaBFID), a specialized development-finance institution backed by the government, is in talks with multilateral agencies like the World Bank and Asian Development Bank (ADB) on counter-guarantees for credit enhancement to infrastructure projects in India.

The infrastructure financier is identifying entities for credit enhancement. Rajkiran Rai G, managing director, told Business Standard these were guarantees for instruments and might not add much to assets.

"They help to further the broad mandate of developing fund-raising avenues like the bond market in the country," he said.

Credit enhancement has an arrangement by which if there is a bond default NaBFID will be the first one to pay investors without waiting for the entity (issuer) to make the payment. It is a first-loss guarantee. Multilateral agencies provide counter-guarantees, which are like reinsurance.