The move reflects growing volatility in India’s bond market and highlights how the state-backed lender is preparing for interest-rate swings as infrastructure lending accelerates.
India’s main infrastructure lender is boosting the use of derivatives as falling interest rates are squeezing its margins, according to people familiar with the matter.
The National Bank for Financing Infrastructure and Development, or NaBFID carried out transactions with a number of banks including JPMorgan Chase & Co., Standard Chartered Plc, Citigroup Inc. and Deutsche Bank AG, said the people who asked not to be identified because the information is private. These included index swaps and total return swaps, they said.
Rate impact
NaBFID has ramped up such deals over the past year to prevent falling interest rates from squeezing its cash flows. The Reserve Bank of India slashed its main rate by 125 basis points last year, posing a challenge for the lender because its loans are repriced every six or 12 months, while most of its own borrowing costs are fixed. Swaps allow one party to exchange fixed-rate payments for floating ones, helping smooth cash flows when rates move.
For the first time, some of these deals are now linked to bonds issued by Indian state governments, the people said, as rising yields on provincial debt have made the swaps more lucrative. The lender is also locking in swaps for 10 to 15 years to better match the life of its loans.
New Structures
More broadly, the push into more complex hedging strategies reflects turbulence in India’s bond market, where borrowing costs have jumped amid uncertainty over future rate cuts — and shows how the state-backed lender is preparing for volatility as Prime Minister Narendra Modi’s infrastructure push gathers pace.
Loans disbursed stood at ₹91,190 crore ($10.1 billion) on Sept. 30, up 21% from end-March, according to the lender’s investor presentation for end-September. The notional value of the financier’s outstanding derivatives reached ₹47,050 crore at the end of that month.
JPMorgan, Standard Chartered, Citigroup and Deutsche Bank declined to comment. NaBFID did not respond to Bloomberg’s emails seeking comment.
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Published on January 9, 2026
