India's National Bank for Financing Infrastructure & Development, or NaBFID, plans to enter the overseas credit market for the first time this fiscal year, with the goal of raising up to $2 billion in loans and bonds.

The state-owned infrastructure lender first plans to raise at least $250 million through an external commercial borrowing loan with a three- to five-year term. The agency is working with rating agencies to obtain a rating, they said. 

The government established NaBFID in 2021 to attract new capital, strengthen the bond market, and close the sector's financing gap. 

That gap is a major impediment to Prime Minister Narendra Modi's plans to transform the Indian economy, especially since private investment has dwindled over the last decade, according to a Knight Frank report.

NaBFID rating could be issued as early as next month, with the first loan due in June. However, if economic uncertainty increases as a result of tariff hikes, the plans may change, according to the report.

A new $2 billion borrowing would undoubtedly expand India's offshore debt market, which is small in comparison to Asian peers such as South Korea. Bloomberg data shows that Indian companies issued approximately $13 billion in dollar bonds last year.

Global banks are now in talks with NaBFID to iron out the details of the borrowing. According to the reports, multilateral agencies are also conducting bilateral talks with the borrower.