The National Bank for Financing Infrastructure and Development (NaBFID) is a development finance institution established by the Government of India in 2021. It was created to support the development of infrastructure projects in the country and to attract long-term finance from domestic and foreign sources. Here is a detailed note on NaBFID:
- Objectives:
The main objective of NaBFID is to support infrastructure projects in India by providing long-term finance, which is currently a gap in the financial sector. NaBFID aims to mobilize both domestic and foreign investments in infrastructure projects by providing a platform for collaboration between different stakeholders.
- Governance:
NaBFID is a wholly-owned government company, and its Board of Directors comprises of eminent professionals with experience in finance, infrastructure, and related sectors. The Board of Directors is responsible for formulating policies, approving loans, and overseeing the operations of the institution.
- Functions:
NaBFID’s primary function is to provide long-term finance to infrastructure projects, which are defined as projects in the sectors of energy, transportation, water and sanitation, communication, social and commercial infrastructure, and any other sector that the Central Government may specify from time to time. NaBFID also offers advisory and consultancy services to its clients, including feasibility studies, project structuring, and financial restructuring.
- Capital:
NaBFID has an authorized capital of Rs.1 lakh crore, which is divided into equity and debt. The Central Government is the majority shareholder of the institution, and other financial institutions and banks can also invest in NaBFID.
- Borrowing:
NaBFID can borrow from domestic and foreign sources, including multilateral agencies, sovereign wealth funds, and pension funds. The institution can also issue bonds and debentures to raise capital.
- Benefits:
NaBFID’s establishment is expected to boost infrastructure development in India, which has been a major bottleneck in the country’s economic growth. The institution’s ability to provide long-term finance to infrastructure projects will attract foreign investments and enable the completion of large-scale projects that were previously unviable due to the lack of funding.
Conclusion:
NaBFID is a welcome addition to India’s financial sector, which has been lacking long-term financing options for infrastructure projects. The institution’s focus on infrastructure development is expected to have a significant impact on the country’s economic growth, and its ability to attract foreign investments will help bridge the funding gap in the sector. NaBFID is an important step towards achieving the goal of making India a $5 trillion economy by 2025.