Financial institution NaBFID introduces partial debt augmentation program
On September 18, 2025, the National Bank for Financing Infrastructure and Development (NaBFID) introduced a new initiative called the Partial Credit Enhancement (PCE) facility. The launch took place at the Annual Infrastructure Conclave 2025 in Mumbai, which was inaugurated by M. Nagaraju, IAS, Secretary, Department of Financial Services.
The PCE facility is designed to transform infrastructure bonds, providing a much-needed boost to the infrastructure sector. By aligning the risk profile of these bonds with the stringent, risk-averse investment mandates of insurance companies, pension funds, and provident funds, PCE makes infrastructure bonds more appealing assets.
This innovative mechanism is crucial for bridging the gap in infrastructure financing. Traditional sources of financing, such as bank lending, are often constrained by asset-liability mismatches and concentration risks. The PCE facility aims to strengthen the infrastructure bond market and improve access to long-term capital for infrastructure projects.
Rajkiran Rai G, the Managing Director of NaBFID, emphasized the importance of this initiative. He stated that the aspiration of becoming a high-income economy by 2047 requires a structural transformation, powered by robust infrastructure that enables seamless connectivity, efficient logistics, and inclusive urbanization. The creation of robust and modern infrastructure is crucial for India to reach its vision of becoming a $7.0 trillion economy by 2030 and $30.0 trillion by 2047.
The estimated infrastructure spending between fiscals 2026 and 2030 is in the ₹90 lakh crore to ₹100 lakh crore range. The PCE facility unlocks access to long-term capital from insurance companies, pension funds, provident funds, and other institutional investors, contributing significantly to this spending.
By improving the credit profile of infrastructure bonds, PCE supports credit ratings of these bonds from a relatively lower-rated to a higher-rated category, making them potentially more appealing assets for insurance companies, pension funds, and provident funds. This, in turn, can help attract more investment into the infrastructure sector, thereby accelerating India's journey towards becoming a global economic powerhouse.
The article does not provide new information about the estimated infrastructure spending range or the visions of India becoming a $7.0 trillion economy by 2030 or a $30.0 trillion economy by 2047. However, it underscores the importance of innovative mechanisms like the PCE in achieving these ambitious goals.
The bond market has played a limited role in infrastructure funding, despite its potential. The PCE facility, by transforming infrastructure bonds into more appealing assets, can help change this narrative, paving the way for a more robust and sustainable infrastructure sector in India.
