NIDA

NABARD Infrastructure Development Assistance (NIDA) Scheme

NABARD Infrastructure Development Assistance (NIDA) Scheme

NABARD in collaboration with State Government has been funding various rural infrastructure initiatives through the Rural Infrastructure Development Fund (RIDF). However, this process of funding was facing some technical issues, thereby limiting the contribution of NABARD towards rural infrastructure development. In order to address this issue, NABARD has launched a new scheme, named NABARD Infrastructure Development Assistance (NIDA) for funding rural infrastructure projects. In this article, we look at the NABARD Infrastructure Development Assistance (NIDA) scheme in detail.

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NIDA

NIDA is a line of credit support for funding rural infrastructure development projects. NIDA is available for state governments and any other state-owned organizations, such as corporations.

For the state governments, NIDA assists in rural infrastructure development, outside of RIDF borrowing. And also for other state-owned organizations, NIDA grants direct financing based upon risk appraisal of every specific project.

Objectives of the Scheme

The objectives of the NIDA scheme are given below:

NIDA intends to assist existing development schemes of NABARD by providing financial support to rural infrastructure projects and to ensure the sustainability of the venture of NABARD.

Focused Areas

The following are the areas that have been identified as the potential areas for funding under NIDA projects.

  • Project Evaluation and Monitoring
  • Technical Advisory Support
  • Linkage with existing development schemes

Nature of Assistance

Under the NIDA scheme, the nature of assistance will be in the form of term loan.

Interest Rate

The rate of the interest will vary depending upon the project and the risk profile of the borrower. Usually, interest rates will be linked to the market borrowings of the NABARD. However, the assistance provided under the NIDA scheme can be availed at flexible interest rates.

Security

Under this scheme, the borrowers are required to provide appropriate security, based on the borrower’s risk.

Note: If requested, the guarantee from the State Government has to be obtained by the borrower.

Repayment of Loan

Based on the project nature and borrower profile, the repayment schedule is fixed. And the repayment period allocated for the loan amount will be for up to 15 years, including the moratorium period.

Moratorium

Based on the type of the project and risk profile of the borrower, the moratorium of up to 2 to 4 years can be considered.

Additional Products

The assistance offered under the NIDA scheme can be refined further, and other products such as annuity-based products, mezzanine capital, PPP, etc. can be structured based on market demand and requirements of the borrower.

Documents Required

The following are the documents required to be furnished by the borrower along with the application.

  • Copy of latest audited balance sheet for three years
  • Copy of most recent audited Profit and Loss statement for three years.
  • Copy of latest schedules to balance sheet and Profit & Loss, auditor’s notes and annexures to balance sheet and Profit & Loss for three years
  • Copy of recently filed Income tax returns for three years
  • Details of entire outstanding loans, as well as loans recently closed, amount outstanding, repayment schedule, attached collateral security, sources of funds, plan of repayment of existing debt and terms & loan condition.
  • No due certificate from existing bankers, report on the conduct of account and non-encumbrance certificate on collateral/security proposed.
  • Copy of approved documents including MoEF clearance, Forest Department clearance, Pollution Control Board clearance, Water allocation, Chimney height clearance from AAI etc. (if applicable).
  • Copy of land purchase agreement, rehabilitation programme and approved resettlement (if required).
  • Copy of contracts for engineering, construction, procurement, civil works etc. which are granted by the borrower.
  • Title deeds for all collateral security proposed.
  • Lender’s Engineer (LE) technical due diligence report. i.e. the appointment of LE is made in terms of mutually agreed by both the lender and borrower.
  • Appointment of Lender’s Insurance agent and Lender’s Legal Counsel (LLC), and receipt of LLC’s due diligence report on all transaction records including financing documents, contract copies, land title deeds, project documents, security and collateral records etc. A search must be performed on the land title clearance, preferably for 33 years.
  • Agreements which are relevant to the specific sector. e.g. agreement with FCI for storage warehouse rents, and for the power sector, MoU with State Government, bulk power transmission.

How to Apply?

The proposal (Detailed Project Report) has to be submitted to the Chief General Manager of the respective Regional Office of the State. The DPR should include the technical details of the project as well as a detailed business plan to indicate the financial viability of the project and the borrower.

Submission of Detailed Project Report (DPR)

The Detailed Project Report (DPR) is the document required to be produced by the borrower. Mostly DPRs collected for RIDF projects concentrate only on technical details of the project. Under NIDA, it will be necessary to have a detailed business plan that needs to specify the financial viability of the borrower and the project. In addition to that, also multiple other documents are required to support the DPR.

The following are the list of details which are to be included under the Detailed Project Report (DPR):

  • Details of the borrower which includes company background, shareholding pattern, existing bankers etc.
  • Details of the management team (Executive team and board of directors with qualification and experience)
  • Sector background and rationale for the project
  • Project description and scope
  • Project cost and financial structuring
  • Project phasing and timelines
  • Project operation and maintenance planning
  • Sales and marketing plan
  • Procurement plan for raw materials/inputs etc
  • Technical specifications of the project, including drawings (if applicable)
  • Project financial viability and sustainability such as
    • Detailed business plan, with investment and operating cost estimates
    • Details of loan sought, and security or collateral offered
    • Cash flow estimates for debt service
    • Sources of funds or means of financing 
  • Information on existing business (apart from the new project proposed)
    • Description of existing business
    • Market size and market share, customer segments, service or product sold by the borrower
    • Potential loan requirements for existing business and also the details of additional loans impact the capacity to repay NIDA loan.
    • Business plan for existing business such as revenues, operating expenses projected for the tenure of the loan.

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