NaBFID loan book grows tenfold to $10.76b in three years

Loan book expansion is expected to continue over the next few years.

National Bank for Financing Infrastructure and Development (NaBFID) is expected to remain closely aligned with the strategies and policies of India’s central government, which has helped expand its loan book tenfold in three years.

NaBFID’s loan book has expanded to $10.76b (INR1.027t) in fiscal 2026 (ending 31 March) from just INR97b in 2023, S&P Global Ratings said in a report.

The expansion of its loan book is expected to continue over the next few years, the credit rating agency said.

“In tandem with this rapid expansion, we believe 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,” S&P said.

S&P said that NaBFID plays a critical role in furthering the Indian government’s infrastructure development agenda, as it provides ultra-long tenor loans which commercial institutions typically cannot replicate.

NaBFID also provides partial credit enhancement for infrastructure bonds to attract more private investments, S&P said.

“Major infrastructure projects in India require massive capital, and these projects are segmented into different packages or phases. As such, while NaBFID does not typically fund major infrastructure projects entirely by itself, it helps to finance a significant number of these phases across different projects,” S&P said.

However, the bank’s return on assets (ROA) and net interest margins are expected to decline as NaBFID scales up its business.

Separately, NaBFID is in the process of setting up dedicated credit enhancement facilities in partnership with the World Bank and the Asian Development Bank.

NaBFID is wholly owned by the Indian government.

ROA is reportedly higher than other policy banks despite dipping to 3.3% in fiscal year 2026, from 3.5% the previous fiscal year, S&P noted.

Meanwhile, Indian private sector banks’ credit fundamentals should remain sound and loan growth will be robust for the rest of the fiscal year, according to a separate report by CreditSights.

(US$1 = INR 95.48, as of 31 July 2026)