New NBFC to ease credit for infra projects on cards
Notable because
An institution that facilitates bond market refinancing of existing project loans could help address headroom constraints at domestic lenders for financing infrastructure, including clean energy. For example, while generation capacity to meet India’s 2030 clean power targets requires ~USD 200 billion in investments, the exposure of domestic lenders to the power sector is of a similar magnitude. A subsidised credit-enhancement facility for renewable energy bond market issuances could be one way to address headroom constraints.
What to look out for in the months ahead
What would be the scale of capitalisation of the proposed NBFC? Would it be equity financed exclusively from government budgets or could other sources of capital be tapped as well? Would the proposed NBFC guarantee only loan books of infrastructure NBFCs, or could it also provide guarantees to developers looking to refinance?