RBI Grade BNABARD ESISEBI
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Source: Mint
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Context:
NaBFID (National Bank for Financing Infrastructure and Development) is collaborating with the World Bank and Asian Development Bank (ADB) to set up a $1 billion risk-sharing facility.
Purpose of Facility:
- Introduce credit enhancement products such as partial credit guarantees.
- Support infrastructure companies with ‘BBB’ to ‘A’ credit ratings, helping them:
- Enhance credit profiles
- Reduce borrowing costs
- Access the bond market on favourable terms
Regulatory Context:
- RBI’s Limit Rule:
- Suppose an AIF scheme = ₹1,000 crore total size.
- 20% cap rule: All RBI-regulated entities together (banks, NBFCs, etc.) can invest maximum ₹200 crore in that scheme.
- 10% per entity rule: A single bank/NBFC cannot invest more than ₹100 crore in that ₹1,000 crore scheme.
- Backing from multilateral agencies expands NaBFID’s ability to issue partial credit guarantees beyond this cap.
Strategic Importance:
- Addresses India’s infrastructure financing gap (over 5% of GDP).
- Encourages private capital participation, given insurance and pension funds currently allocate only 6% of portfolios to infrastructure.
- Helps corporates reduce borrowing costs, particularly on long-term projects with high capital requirements.
