India’s first maritime lender, state-owned Sagarmala Finance Corporation Ltd (SMFCL) hit the ground running with a Rs 4,300 crore disbursement announcement last Tuesday, within months of being registered as a non-banking financial company (NBFC) in June 2025.
Image used for representation purpose only. Photograph: Aly Song/Reuters
SMFCL was created by revamping the Sagarmala Development Corporation Ltd (SDCL) by the government with the sole purpose of boosting maritime finance as part of the larger national push to revive shipbuilding and create a strong maritime economy — announced by Finance Minister Nirmala Sitharaman in her Budget speech in February 2025.
However, the entity faces teething troubles and is eyeing an aggressive lending plan and government support, a top executive said.
“Right now, the challenge is, since our net worth is very limited, as per the Reserve Bank of India (RBI), we need to follow certain regulatory mandates like Capital to Risk-Weighted Assets Ratio (CRAR), and exposure norms,” said LVS Sudhakar Babu, managing director (MD) of SMFCL, in an interview with Business Standard.
The company cannot lend beyond 25 per cent (of its capital base) to each individual borrower or more than 40 per cent to a group.
“This is becoming a challenge. Though there is potential business available right now, we are unable to lend because of these restrictions.
“As an alternative, we have requested the government to infuse additional equity, which is on the cards.
“They may do it by next financial year (FY27). We are expecting a minimum Rs 2,000 crore,” said Babu.
SMFCL is also the nodal agency for setting up the Rs 25,000 crore Maritime Development Fund (MDF) and for its operational coordination.
The Fund comprises Maritime Investment Fund (MIF), with a corpus of Rs 20,000 crore, and the Interest Incentivisation Fund (IIF), with a corpus of Rs 5,000 crore.
Babu said the company will hold and manage the government’s contribution to the alternative investment fund established for MIF, and is the nodal agency to channelise the IIF, which will also enhance its scope of funding.
The MD also said SMFCL is ready to lend at costs of borrowing below the prevailing market rates, primarily because of two reasons — it has negligible operating costs due to a lean workforce, and its own cost of borrowings would also be low as it has a clean slate.
“There are no backlogs or non-performing assets (NPAs), so our cost of funds will be cheaper.
“We can lend at around 20-30 basis points (bps) off the prevailing market rate,” he said.
The NBFC also has plans to enter shipbuilding in a big way.
The sector has found few backers in the past due to the capital-intensive nature of the industry and the risks involved.
The government has introduced a Rs 70,000 crore maritime revival package.
One of the goals of the package is to make maritime finance accessible and cheaper for stakeholders.
SMFCL was created with this objective in mind. However, financing of several projects will require expansion.
Babu said the ticket size for private projects cannot be more than Rs 150 crore currently and, therefore, they are not an immediate priority, even though there are plans to lend for such projects later.
It will also be automatically out of the fray for large non-state-backed projects as maritime projects are high capital expenditure, long gestation ones.
For shipbuilding, SMFCL will likely join hands with other lenders in consortia to finance large projects, Babu said.
“In this sector, you need a minimum ticket size (in terms of loan value) of Rs 1,000-2,000 crore.
“So, currently, we cannot satisfy the requirements of large private sector projects.
“That is why we are now focusing on the government sector since the CRAR or exposure limits are not applicable,” he said.
Babu expects that with adequate equity infusion and time, the company will be in a position to handle public-private partnership (PPP) ticket sizes of Rs 1,000 crore and more.
While the NBFC’s board has approved loan sanctions worth Rs 25,000 crore, Babu wants to take the lender’s assets under management (AUMs) to the range of Rs 40,000 crore to Rs 50,000 crore in the medium term.
