The move reflects rising volatility in India’s bond market and highlights how the state-backed lender is preparing for interest rate swings as infrastructure lending accelerates.
The National Bank for the Financing of Infrastructure and Development, or NaBFID, transacted 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 include index swaps and total return swaps, they said.
Assess impact
NaBFID has stepped up these types of deals over the past year to prevent falling interest rates from putting pressure on cash flows. The Reserve Bank of India cut its key interest rate by 125 basis points last year, posing a challenge for the lender because its loans are reset every six or 12 months, while most of its own borrowing costs are fixed. Swaps allow one party to exchange fixed-rate payments for variable-rate payments, smoothing cash flows when interest rates change.
For the first time, some of these deals are now linked to bonds issued by Indian state governments, the people said, as rising interest rates on provincial debt have made the swaps more lucrative. The lender also enters into swaps for 10 to 15 years to better match the term of its loans.
New Structures
More broadly, the push for more complex hedging strategies reflects turbulence in India’s bond market, where borrowing costs have risen amid uncertainty about future rate cuts — and shows how the state-backed lender is preparing for volatility as Prime Minister Narendra Modi’s infrastructure efforts ramp up.
Loan disbursements stood at ₹91,190 crore ($10.1 billion) as of September 30, up 21% from March-end, according to the lender’s September-end investor presentation. The notional value of the financier’s outstanding derivatives stood at ₹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
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