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Recently, Lok Sabha passed the National Bank for Financing Infrastructure and Development Bill, 2021.
Objective
- The bill seeks to support the development of long-term non-recourse infrastructure financing in India including the development of the bonds and derivatives markets necessary for infrastructure financing and to carry on the business of financing infrastructure.
Key Highlights of the Bill
- The Bill seeks to establish the National Bank for Financing Infrastructure and Development (NBFID) as the principal Development Financial Institution (DFIs) for infrastructure financing.
- NBFID will be set up as a corporate body with an authorised share capital of one lakh crore rupees.
- Initially, the central government will own 100% shares of the institution which may subsequently be reduced up to 26%.
- Source of funds: NBFID may raise money in the form of loans or otherwise both in Indian rupees and foreign currencies, or secure money by the issue and sale of various financial instruments including bonds and debentures.
- Management of NBFID: NBFID will be governed by a Board of Directors.
- The members of the Board include the Chairperson appointed by the central government in consultation with RBI, a Managing Director, up to three Deputy Managing Directors, two directors nominated by the central government, up to three directors elected by shareholders, and a few independent directors (as specified).
- Functions include:
- Extending loans and advances for infrastructure projects.
- Taking over or refinancing such existing loans
- Attracting investment from private sector investors and institutional investors for infrastructure projects
- Organising and facilitating foreign participation in infrastructure projects.
- Facilitating negotiations with various government authorities for dispute resolution in the field of infrastructure financing.
- Providing consultancy services in infrastructure financing.
- Extending loans and advances for infrastructure projects.
