Funnelling Progress

NaBFID has been mandated with evolving and deepening India's infrastructure investments pipeline. Will it succeed?

- ANAND ADHIKARI

IN THE LATE 1990s, the newest development finance institution, or DFI, IDFC Ltd, had the herculean task of guiding private investments into the infrastructure segment that was grappling with policy uncertainty, evolving regulations, and a lack of long-term finances. Back then, the telecom sector was still in its infancy, as were private power producers, who were dealing with uncertainty in fuel linkages, and loss-making electricity distribution companies. The infrastructure-focussed IDFC Ltd. was the newest addition to the ranks of erstwhile ICICI Ltd and IDBI Ltd, which were set up to finance industrial projects, but later converted into commercial banks. IDFC, too, followed suit in 2014, by converting into a banking entity.

The earlier DFIs did serve their purpose of industrial financing in the '80s and '90s, by supporting many of the core industries that came up in India during the time. Now, the government is counting on the National Bank for Financing Infrastructure and Development (NaBFID)-set up in April 2021 and operationalised in Q1FY23-to revisit the infrastructure space with new innovations and business models. The question now, is whether it can scale up to meet the growing funding needs of a fast-growing economy.