The National Bank for Financing Infrastructure and Development (NaBFID) plans to introduce takeout financing products to help finance projects and allow timely exits for commercial lenders.
About Takeout financing
- Takeout financing helps extend loan repayment periods as new lenders take over or refinance project loans, facilitating the removal of the assets from the books of financing banks within a pre-fixed period to avoid asset-liability mismatches.
- In other words, take-out financing is a method of providing finance for longer duration projects of about 15 years by banks sanctioning medium-term loans for 5-7 years.
- It is given that the loan will be taken out of books of the financing bank within pre-fixed period by another institution, thus preventing any possible asset-liability mismatch.
- After taking out the loan from banks, the institution could offload them to another bank or keep it.
About NaBFID
- NaBFID was set up in 2021, by an Act of the Parliament (The National Bank for Financing Infrastructure and Development Act, 2021).
- It was set up with the essential objectives of addressing the gaps in long-term non-recourse finance for infrastructure development, strengthening the development of bonds and derivatives markets in India, and sustainably boosting the country’s economy.
- The entire shareholding of the Institution is currently held by the Government of India.
