NABARD’s ₹195 Billion Approval—The Future of Long-Term Investment?

Image Source: Agro Spectrum India

India’s National Bank for Agriculture and Rural Development (NABARD) has received government approval to raise ₹195 billion ($2.3 billion) through deepdiscount bonds. This move is expected to boost longterm funding for rural development projects while offering investors a unique debt instrument.

Key Highlights:

Bond Type: Deepdiscount zerocoupon bonds
Maturity: 10 years, 11 months, and 13 days
Fundraising Deadline: March 2027
Purpose: Strengthen NABARD’s financial capacity for rural infrastructure and agricultural financing
Investor Appeal: No regular interest payments, redeemed at face value upon maturity

Deepdiscount bonds are a rarely used debt structure in India, typically issued at a 2025% discount to face value. They do not pay periodic interest, making them attractive for longterm investors seeking capital appreciation.

This approval aligns with the government’s broader strategy to expand financing options for staterun institutions. NABARD joins a growing list of public sector entities, including REC and Power Finance Corp, that have been permitted to issue such bonds in recent months.

Market analysts suggest that NABARD’s deepdiscount bonds could attract institutional investors looking for stable, longterm returns. With interest rates expected to remain volatile, this debt instrument provides a predictable exit strategy for investors at maturity.

Source: Yahoo Finance, Reuters