India's Infrastructure Navigates Interest Rate Waves

As global interest rates rise, India's infrastructure sector is adjusting its strategies to manage increased costs. NaBFID's managing director, Rajkiran Rai, noted that these changes are already reflected in bond markets. The sector is focusing on alternative funding and strength in credit growth to sustain development.

India's infrastructure sector is adapting to the escalating global interest rates, with the heightened costs now being considered in market dynamics. This insight was shared by Rajkiran Rai G, the Managing Director of the National Bank for Financing Infrastructure and Development (NaBFID), during an event in Mumbai, highlighting the sector's proactive adjustments.

Rai emphasized that the upward trend in interest rates is conspicuously impacting the cost of funds. Despite this, certain measures, such as the Reserve Bank's initiatives, have alleviated banks' liability pressures, noting a credit growth rate of 14-15% versus a 9% initial rise in deposits, which has now improved.

Addressing the execution timeline for infrastructure projects, Rai outlined that the completion of projects takes significant time, with expectations of a jump in NaBFID's active loan book to Rs 2 lakh crore by year-end. He also pointed out alternative funding avenues like Infrastructure Investment Trusts (InvITs) and highlighted the corporate preference for cost-effective bond markets.