State-backed infrastructure lender National Bank for Financing Infrastructure and Development (NaBFID) is tipped to get the mandate for managing the Rs 25,000 crore Maritime Development Fund (MDF) announced in the Union Budget (2025-26), multiple sources familiar with the matter said.
The National Investment and Infrastructure Fund Ltd (NIIF), a sovereign-linked alternative asset manager, which was previously considered the ideal agency to manage the fund, is said to have expressed its reluctance to take up the task due to “lack of expertise and experience”.
“The Department of Financial Services in the Ministry of Finance seems to be comfortable with NaBFID and has suggested that the mandate be handed over to the infra lender,” a government official briefed on the plan said, asking not to be named.
While NaBFID, like NIIF, doesn’t have the experience of managing a maritime fund, sources in the know have said that the newest infra lender “will have to attract talent” if it gets the mandate.
“NaBFID will have to set up the fund management activity and the law, under which it was set up, permits it to do so. Besides, the law grants freedom to the lender, including on-boarding executives at market related salaries, which a typical public sector undertaking is unable to do,” the government official mentioned earlier, said.
NaBFID’s only exposure to the maritime sector since starting operations is a Rs 1,750 crore term loan given to Dubai government-owned global port operator DP World Ltd for building a 2.19 million twenty-foot equivalent units (TEUs) capacity terminal at Tuna Tekra in Deendayal Port.
“For long-term financing of maritime industry, a Maritime Development Fund with a corpus of Rs 25,000 crore will be set up,” Nirmala Sitharaman said in her Budget speech to Parliament on February 1, 2025. This will be for distributed support and promoting competition.
The MDF will have up to 49% contribution by the government and the balance will be mobilised from (state-owned) ports and from the private sector, Sitharaman added.
The importance of hiring a fund manager to manage the MDF at the earliest was stressed upon at a stakeholders meeting held by the Ministry of Ports, Shipping and Waterways on February 27, 2025, in Mumbai.
“This will ensure that they are involved right from the inception stage itself so that they are able to provide the necessary inputs along the process rather than bringing them at a later stage,” R Lakshmanan, joint secretary, Ministry of Ports, Shipping and Waterways, said at the stakeholders meeting.
The government is exploring the possibility of using the International Financial Services Centre (IFSC) ecosystem to tap foreign capital, which can become a feeder fund of MDF. Given the wide landscape, it was necessary to have a “priority” order for using the MDF to help focus on certain key aspects of the maritime sector, Lakshmanan added.
The government is looking at a “two-entity concept” for financing the requirements of the maritime sector with one entity housed in the Gujarat International Finance Tec-City (GIFT City) and the other outside and how the movement of capital will take place, said T K Ramachandran, secretary, Ministry of Ports, Shipping and Waterways.
The GIFT City is India’s first and, currently, the only International Financial Services Centre (IFSC) under the Special Economic Zone Act.
(source : ET Infra)
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