State Scheme

National Bank for rural and Agriculture Development, it provides fund for the road connectivity and facilitation to Rural Population of Bihar in Bihar. It works for rural roads and bridges for agricultural growth.

BIHAR’s  DEVELOPMENTAL CHALLENGES

Bihar’s development challenges must be considered in the light of India’s overall development agenda. Located in the most densely populated part of the hindi heartland. Bihar is India’s third most populated state with a total population of 83 million, and accounts for one-seventh of India’s population below the poverty line. The state’s performance lags seriously behind national trends, and is a significant contributing factor to the growing income gap across states. If Bihar does not enter the mainstream of national economic growth and prosperity, its performance disparities will continue to widen significantly.

Major Challenges are as follows:

·       The challenge of improving growth performance

·       The challenge of strengthening social service delivery

·       The challenge of strengthening public administration and governance

The options available for the proposed Market borrowing programme for raising debt are enlisted below:

Project Loans from Commercial banks: Project loans from commercial banks, at present, are one of the largest sources of debt financing for infrastructure projects. However as most of commercial banks accept deposit for short to medium terms, long term infrastructure loans given by them lead to Asset Liability mismatches for the bank. Given the leading role played by these banks in last decade or so, most of these banks are now approaching or have breached exposure limits for infrastructure financing.Adding to the woes of the sector are the present spate of Stressed Asset / NPA cases being encountered by the commercial banks, which are considerably hampering the appetite of these banks to lend to the infrastructure sector.Also, given the increased risk perception / profile of infrastructure projects,these facilities also carry a higher Rate of Interest.

Funds from Non-banking Financial Corporations: The 2nd biggest contributor debt financing of infrastructural projects in India are Non-Bank Financial Corporations. The companies have access to longer terms deposits / loans and are in a better position to lend to infrastructure projects with longer gestation period. However as normally they don’t have access to public deposits like commercial banks, their funding bases is comparatively small thus restricting their lending appetite as well.

External commercial borrowings: External Commercial Borrowing although an attractive option from the Rate and Tenor perspective, would be very difficult to approach for a State Level project funding with budgetary support as the main repayment source.  

Bond Issuance to raise money from Insurance / Pension / Retiral Funds: The above leave us with the option of exploring the large investor base of Insurance / Pension / Retiral funds available in India for raising debt for infrastructure project through bond market. These funds are governed by their respective guideline issued by IRDA /PFRDA /Min of Labour / Min of Finance from time to time. Given these funds have a social angle added to them, one of the most important directives for them is to invest primarily in bonds credit rated AA or above. There fore, one of the major elements for a successful Bond issue in the Bond Market is the Credit Rating profile of the borrower.