NaBFID launches Partial Credit Enhancement product to boost capital access to infra projects

The National Bank for Financing Infrastructure and Development (NaBFID) Thursday launched a Partial Credit Enhancement (PCE) product to improve long-term capital access for infrastructure projects. The financial instrument can be used to ease credit risks and improve the creditworthiness of debt instruments, particularly bonds.

“India’s growth aspirations are deeply tied to the strength of its infrastructure backbone. As we prepare for the coming decades, the convergence of long-term capital, technology, and urban innovation will determine the pace of transformation,” said Rajkiran Rai G., Managing Director, National Bank for Financing Infrastructure and Development, in a statement.

This will be the first credit-enhanced bond issued by the lender, following the revised directions issued by the Reserve Bank of India (RBI). The final directions introduced by the central bank on Non-Fund Based Credit Facilities (including PCE) in August, expanded the pool of PCE providers, and raised the PCE limit from 20% to 50% of bond issue size. Further, a lower capital requirement, as per an ICRA note, would make the facility more lucrative for borrowers.

The launch was announced at the bank’s Annual Infrastructure Conclave 2025 in Mumbai in the presence of M. Nagaraju, IAS, Secretary, Department of Financial Services (DFS), Tuhin Kanta Pandey, Chairman, SEBI, and Sivasubramanian Ramann, chairperson, Pension Fund Regulatory Development Authority (PFRDA).

A NaBFID-Crisil report released at the conclave listed down the benefits of PCE. This included lower borrowing costs, improved financial viability of long-term projects, and diversified funding sources. This further attracts long-term investors to corporate bond market.