New Delhi, Feb 6 (PTI) NaBFID managing director and CEO Rajkiran Rai G on Thursday said partial credit enhancement facility for corporate bonds announced in the Budget 2025-26 should be operational in April.

Partial credit enhancement is a product which will enable the bond market development as it would help upgrade the credit rating of the bonds of the corporates. This will thus help corporates to access the funds from the bond market on better terms as their ratings are upgraded.

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Partial credit enhancement becomes very essential for infrastructure projects as it will help mobilise funds at cheaper rate, he told PTI in an interview.

"We have already worked on the contours, and the government also enabled us by making the budget announcement," he said.

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NaBFID will set up a 'Partial Credit Enhancement Facility' for corporate bonds for infrastructure, Finance Minister Nirmala Sitharman said in her Budget Speech 2025-26.

Rai further said that NaBFID is talking to multilateral development banks for its partial credit enhancement facility.

"We are also working with the multilaterals. But we'll not wait for that as broadly we are ready with the product. So we'll go through the final approval process internally and maybe in a month or two, we'll launch the product," he said.

Asked when the product would be launched, Rai said, "You can say by April, it may be before that."

"If you look at municipalities, except one dozen municipalities which are already doing bond issuances and raising money, there are hundreds of other municipalities which can issue bonds, but their ratings are below investment grade or below," he said.

With the credit enhancement, he said, the ratings of those bonds would be upgraded so that banks and insurance companies can subscribe to those papers.

NaBFID, set up in 2021, is a specialised Development Finance Institution in India aimed at supporting the country's infrastructure sector. It is 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.

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