Parliament passed “National Bank for Financing Infrastructure and Development Bill, 2021” (NBFID Bill) after Rajya Sabha approves it on March 25, 2021. Bill was passed in Lok Sabha on March 24, 2021.
NBFID Bill
The bill seeks to establish a National Bank for Financing Infrastructure and Development to support ‘infrastructure financing’ across the country. NBFID would work as a principal development financial institution (DFIs). It includes development of bonds and derivatives markets which are required for infrastructure financing.
National Bank for Financing Infrastructure and Development (NBFID)
NBFID will be set up as a corporate statutory body. It will have the authorized share capital of one lakh crore rupees along with financial and developmental objectives. It will act as a catalyst for the ecosystem of infrastructure funding. NBFID will be answerable to Parliament. It will be managed by chairman & board nominated professionals who will be appointed by Government. Shares of NBFID can be held by central government, financial institutions, pension funds, insurers, multilateral institutions, Banks, sovereign wealth funds, and other institution prescribed by central government.
Financial objectives of NBFID
Financial Objectives includes- to lend, invest or pull investments directly or indirectly for infrastructure projects entirely or partly in India.
Developmental objectives of NBFID
Developmental objectives include- to facilitate development of market for bonds, loans and derivatives to finance the infrastructure.
Development Financial Institution (DFIs)
DFIs are set up to provide long-term finance for those segments of economy where risks involved are beyond acceptable limits of commercial banks and other financial institutions. DFIs do not accept deposits from people. Instead, they source funds from market, government and multi-lateral institutions. They are often supported by government guarantees.