April 22, 2024: India’s state-owned NBCC is planning to establish its own non-banking finance company (NBFC) later this year to reduce borrowing costs for critical infrastructure projects. The move is projected to save the real estate developer approximately $108 million in interest expenses over the next two years. The NBCC’s board deliberated on this proposal in March 2024, with the final framework for the NBFC expected to be determined post June 2024.
See also: NBCC secures Rs 88.9 crore order from DMRC
Seeking approval for the shadow bank from the incoming administration, to be elected in June following the seven-phase national polls starting April 19, 2024, is part of NBCC’s agenda. Additionally, the company will need a license from the Reserve Bank of India (RBI), for which it has yet to apply.
While the Indian government owns infrastructure financial institutions, NBCC’s move marks a departure as no other state-owned entity has established a unit to facilitate project financing. Presently, NBCC incurs borrowing costs of 12% to 14% from other NBFCs, a figure that could potentially decrease by 1-2 percentage points with the establishment of the NBFC. Notably, NBCC had previously explored setting up an NBFC in 2016, albeit unsuccessfully.
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Dhwani is a content management expert with over five years of professional experience. She has authored articles spanning diverse domains, including real estate, finance, business, health, taxation, education and more. Holding a Bachelor’s degree in Journalism and Mass Communication, Dhwani’s interests encompass reading and travelling. She is dedicated to staying updated on the latest real estate advancements in India.
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