The government is pushing ahead at full speed on infrastructure. He created the National Bank for Infrastructure and Development Finance or NaBFID and appointed seasoned banker KV Kamath as its chairman.
The capital expenditure budgeted for this year is 26% compared to last year and 65% for 2019-2020. In the first six months, the government spent only 40% of the entire year. Therefore, there is a good distance to be covered in the second half of the year. However, the government is also monetizing Rs 111 trillion in assets over the next four years.
NaBFID has received a capital of Rs 5,000 crore and this will be increased to Rs 20,000 crore. This is a huge space to watch in terms of monetization and new investments and could be an important space to watch for. the whole economy over the next six months.
Sharing more information on the developments, Kamath said it had only been 14 days since he took office, but good progress has been made in these days. “We have had the support of some of the biggest banks, we have a team of about fifteen people seconded to us covering all functional areas of development, institutions and infrastructure finance companies with relevant skills .
He said the team is evaluating the appropriate technology platform and all the learnings that have been deployed NDB are helpful. “Like what’s sequencing?” How do you do it? What is the critical path? And how are you doing best on the critical path? Is that all that’s going on? It’s the team of people that has been seconded that works for you full time, ”he said.
Regarding the appointment of the CEO, he said that this was the process that now had to start and would go through the Bureau of Banks, and that the board members would follow this path and it should be soon.
Kamath further said he hoped to have a list of projects identified and possibly assessed by March 31.
“We have to comply with the regulations, we have to make sure that our technology and other platforms are in place. To me, it seems to be the critical path. Human capital is not the critical path, financial capital is not the critical path but the technology platforms you need to have in place to make sure you are in compliance with the regulations, ”Kamath said.
Kamath was asked who would come to the table to ask for money – would it be one of the NHAI projects and would it be for roads or renewables.
He said that at this point, where he and his team are only a few days away, there is a Natural Infrastructure Pipeline (NIP) with the ambition of $ 1.5 trillion and, at l Inside of that, if the team took a very quick deep dive as they were, there are 193 projects of around Rs 1000 crore each, which are ready to go and would therefore start by reviewing these 192-200 projects.
“So given that we have capital, we can leverage that capital very quickly and we can probably provide a bridge. These are preliminary thoughts, we need to discuss this internally and see what all the opportunities we see in the market are, but I don’t want to take the plunge, ”Kamath said.
He added that the 193 projects covered all four or five key sectors – roads, railways, energy, subways, etc., etc. There are also social projects, including irrigation projects. Thus, they will look at things with a very open mind and then see what the need is at the moment and where the funding will be the most significant. “All of this will advance the economic agenda. It’s sure, ”he said.
When asked why he thought NBAFID would succeed when previous DFIs have failed, Kamath said: here is the key – it is not the lack of demand, it is not the reassessment of skills, human capital or financial capital, it was essentially financing other than equity, which is the problem. Funding came from government guarantees, which enabled these DFIs to raise funds in the market and these securities were treated as SLR securities for the purposes of the calculation. By the time that window was removed in the early or mid-90s, the story was very clear. So we had to either change course, correct course or probably hit a wall and ICICI Bank corrected course and we know where the bank is today.
However, today the situation is completely different. At that point, if you looked at where the funding was coming from, it was mostly coming from the banks themselves or some savings generated by the insurance company, he explained. Now all that fundraising activity has changed, there are pension funds and a thriving insurance industry, which has a long way to grow and on the other side they will be looking at long term assets. and, basically, we provide them with the assets, Kamath added.
For the full conversation, watch the video
First publication: STI