Shipping Ministry Proposes NBFC under Sagarmala to Strengthen the Maritime Space and Shipyard Sectors

New Financing Solutions for Shipping and Shipyards

The shipping ministry has taken a significant step by proposing to launch a non-banking finance company (NBFC) under its Sagarmala initiative, aimed directly at meeting the financing needs of the shipping and shipyard sectors. Two senior officials have indicated that the finance ministry is currently reviewing this proposal, with the assistance of the Reserve Bank of India required for operational clearance.

With banks currently hesitant to lend, the NBFC is designed to act as a specialist lender to both shipping companies and shipyards facing difficulties in securing bank loans. The project is expected to enhance available financing options significantly within these sectors.

Challenges Facing the Shipping Industry

Despite being an emerging investment opportunity in India, the shipping industry lacks a dedicated lender since the merging of the Shipping Credit & Investment Corporation of India into ICICI in 1997. Current statistics show outstanding bank loans to the shipping industry at ₹7,019 crore, a decrease from the prior year.

• Shipping Credit Issues: Banks do not recognize ships as collateral, inhibiting fund access.
• NBFC Potential: The proposed structure could allow assets themselves, such as vessels, to serve as collateral, simplifying the funding process.

The ministry projects that with comprehensive financial support, this could lead to fleet expansion, targeting at least 1,000 new ships in the coming decade.

Future Prospects

As India aims for a significant upswing in the maritime space, the proposed NBFC under the Sagarmala initiative may well be key to revitalizing financing and supporting the country’s shipping aspirations.