The Ministry of Finance has issued a key notification under the National Bank for Financing Infrastructure and Development Act, 2021, introducing concessional government guarantee fees to support the financial strength of the country's premier development finance institution, NaBFID.
As per G.S.R. 514(E), published in the Official Gazette on July 30, 2025, the Central Government has amended the National Bank for Financing Infrastructure and Development General Rules, 2022, through the National Bank for Financing Infrastructure and Development General (Amendment) Rules, 2025.
A new provision-Rule 10-has been inserted to allow a concessional guarantee fee rate of just 0.1% for borrowings undertaken by NaBFID from:
- Multilateral institutions
- Sovereign wealth funds
- Other foreign institutions as specified by the Government via separate notification
The concessional rate aims to facilitate access to low-cost foreign capital, enhancing NaBFID's ability to fund critical infrastructure projects. The notification also empowers the government to further reduce this concessional fee for borrowings aligned with purposes mandated by the Central Government.
Key Highlights of Rule 10
- Guarantee Fee Rate: 0.1% annually on borrowings from specified international entities
- Applicability: Fee to be paid at the time of securing the Government guarantee and annually every April 1
- Flexibility: Central Government may lower the rate further on a case-by-case basis
- Disclosure Requirement: NaBFID must submit a detailed request outlining borrowing terms, parties involved, and intended use of funds
This move is expected to bolster India's infrastructure financing framework by enabling NaBFID to secure global funding at concessional rates, aligning with the Centre's vision of a robust, well-capitalized development finance ecosystem.
Official copy of the notification has been attached
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