NaBFID, NABARD sign MoU to boost rural infrastructure financing
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The National Bank for Financing Infrastructure and Development (NaBFID) and the National Bank for Agriculture and Rural Development (NABARD) have signed a Memorandum of Understanding (MoU) to facilitate joint financing opportunities for rural infrastructure projects across India.
The partnership aims to combine NABARD’s extensive rural presence with NaBFID’s infrastructure financing capabilities to develop scalable financing solutions for projects linked to rural development.
Focus on joint financing
Under the MoU, the two institutions will explore co-lending and consortium lending structures to provide long-term financing for rural infrastructure projects.
The areas identified for cooperation include public-private partnership (PPP) projects and agri-value chains, as well as infrastructure with strong rural linkages. These include water and sanitation, irrigation, post-harvest storage and cold-chain facilities, terminal markets, rural roads and bridges, warehousing and compressed biogas.
The collaboration is also expected to cover advisory support for project structuring, financial modelling and debt syndication. Both institutions will draw on their respective training institutions for joint capacity-building initiatives.
Dr Shaji Krishnan V., chairman, NABARD, said rural infrastructure has both a “social and commercial dimension” and highlighted the importance of financing financially sustainable, market-based structures.
“Our role has been to fund financially sustainable, market-based structures, and this partnership lets us work together on value-chain financing, capacity building through our respective training institutions, and on both the liability and asset sides of our business,” Krishnan said.
He added that the collaboration could help “bridge the rural-urban divide” and advance rural prosperity. Krishnan described the MoU as a “good starting point” for the two institutions to work towards that broader objective.
Focus on patient capital
NaBFID managing director Rajkiran Rai G. said the partnership would align the institution’s infrastructure financing capabilities with NABARD’s understanding of rural development requirements.
“This collaboration is a significant step towards strengthening rural infrastructure by aligning our infrastructure financing capabilities with NABARD’s deep understanding of rural development needs,” Rai said.
He added that the objective was to facilitate a greater flow of “patient capital” into rural infrastructure sectors that are important for economic growth and inclusive social development.
NaBFID deputy managing director and CFO Monika Kalia said co-lending and consortium structures would be among the mechanisms used to support the rural infrastructure ecosystem.
“Moreover, beyond financing, this collaboration is an also opportunity to strengthen rural infrastructure project development and execution through our advisory support and capacity-building initiatives,” Kalia said.
NaBFID is a development financial institution established in April 2021, with a mandate focused on addressing the long-term financing needs of India’s infrastructure sector.