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Informist, Tuesday, Jul. 28, 2026

 

--S&P assigns NaBFID 'BBB' long-term, 'A-2' short-term rtg; outlook stable 

--S&P: Rtg on NaBFID considers its critical role in pushing govt infra agenda 

 

NEW DELHI – S&P Global Ratings Tuesday assigned National Bank for Financing Infrastructure and Development a long-term issuer credit rating of "BBB-" with "stable" outlook. The rating agency also assigned "A-2" short-term issuer credit rating to the institution, reflecting the "almost certain likelihood" that the government will provide timely and sufficient extraordinary support to it in times of need.

 

"The stable outlook on the long-term rating reflects that on our sovereign ratings on India and our expectation that its support to NaBFID will remain intact over the next 24 months," S&P said in a report. The support from the government includes injection of capital during the institution's inception, grants, concessional guarantee costs, an exemption from income tax in the first 10 years of operations, and reimbursement of foreign-currency hedging costs. "In addition, we do not believe government support is subject to any transition risk," the rating agency said.

 

Set up in 2021, National Bank for Financing Infrastructure and Development is a specialised development finance institution aimed at supporting the country's infrastructure sector. S&P said the institution will remain closely aligned with the strategies and policies of the central government, such as the national infrastructure pipeline. "Being the country's main development financial institution, the institution plays a critical role in lending to this sector."

 

The institution's loan book has expanded rapidly in the past few years, to INR 1.03 trillion in the financial year 2025-26 (Apr-Mar) from INR 97 billion in FY23. Such rapid growth is likely to continue over the next few years, S&P said, adding that capital infusions from the central government will be forthcoming as and when needed "...to maintain NaBFID's regulatory capital-to-risk-weighted assets ratio requirements". The institution's capital-to-risk-weighted assets ratio was 44.2% at the end of FY26, far exceeding the regulatory requirement of 9%.

 

The institution's return on assets remained higher than that of other policy banks despite dipping to 3.3% in FY26 from 3.5% in FY25. This is because it benefits from low leverage and an unseasoned book, the rating agency said. As it scales up its business and book season, we expect the return on assets to decline, it said. "Likewise, we expect its net interest margins to decline from a healthy 3.7% in FY26," S&P said.

 

According to S&P, the rating on National Bank for Financing Infrastructure and Development could be downgraded following a similar rating action on the sovereign. "We could also take a negative rating action if we see any weakening of government support for the institution," it added. Similarly, the institution could be upgraded if S&P upgrades the sovereign rating.  End

 

Reported by Priyasmita Dutta

Edited by Rajeev Pai

 

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