The National Bank for Financing Infrastructure and Development (NaBFID/NBFID) was established as an infrastructure-focused development financial institution (DFI) under the National Bank for Financing Infrastructure and Development Act, 2021 to support the development of long-term non-recourse infrastructure financing in India including the development of bonds and derivatives markets necessary for infrastructure financing and to carry on the business of financing infrastructure. NaBFID, is the nation’s 5th All India Financial Institution (AIFI), aimed at fostering long-term non-recourse infrastructure financing.
NBFID has been set up as a corporate body with authorised share capital of one lakh crore rupees. Shares of NBFID may be held by: (i) central government, (ii) multilateral institutions, (iii) sovereign wealth funds, (iv) pension funds, (v) insurers, (vi) financial institutions, (vii) banks, and (viii) any other institution prescribed by the central government. Initially, the central government will own 100% shares of the institution which may subsequently be reduced up to 26%.
NaBFID serves both developmental and financial objectives, facilitating credit flow and enhancing infrastructure finance accessibility. NBFID plays a pivotal role in advancing India’s infrastructure sector by addressing financing gaps through innovative tools like longer tenor loans, blended finance, and partial credit enhancement, either directly or indirectly lending, investing, or attracting investments for infrastructure projects located entirely or partly in India. The central government will prescribe the sectors to be covered under the infrastructure domain. Developmental objectives include facilitating the market development for bonds, loans, and derivatives for infrastructure financing.
Functions of NBFID include: (i) extending loans and advances for infrastructure projects, (ii) taking over or refinancing such existing loans, (iii) attracting investment from private sector investors and institutional investors for infrastructure projects, (iv) organising and facilitating foreign participation in infrastructure projects, (v) facilitating negotiations with various government authorities for dispute resolution in the field of infrastructure financing, and (vi) providing consultancy services in infrastructure financing. Developmental Objectives include facilitating the market development for bonds, loans, and derivatives for infrastructure financing.
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 issuing and selling various financial instruments including bonds and debentures. NBFID may borrow money from: (i) the central government, (ii) the Reserve Bank of India (RBI), (iii) scheduled commercial banks, (iii) mutual funds, and (iv) multilateral institutions such as the World Bank and Asian Development Bank.
The central government also provides initial financial support by way of grants worth Rs. 5,000 crore to NBFID by the end of the first financial year. The government will also provide a guarantee at a concessional rate of up to 0.1% for borrowing from multilateral institutions, sovereign wealth funds, and other foreign funds. The costs towards insulation from fluctuations in foreign exchange (in connection with borrowing in foreign currency) may be reimbursed by the government in part or full. Upon request by NBFID, the government may guarantee the bonds, debentures, and loans issued by NBFID.
Related Posts:
Accounting is a multifaceted discipline. It caters to the diverse informational needs of stakeholders within…
As the name says ‘computerised accounting’ is the use of computers, software, and hardware to…
The Supreme Court today overruled a 2008 decision by the National Consumer Disputes Redressal Commission…
The Bank’s financial statements are prepared under the historical cost convention, on the accrual basis…
The term "accounting treatment" represents the prescribed manner or method in which an accountant records…
The Basel Committee on Banking Supervision (BCBS) is the primary global standard setter for the…