NaBFID- Mission Vision & Significance
Background & History
To address the long-term infrastructure financing requirements in India was realized considering the nation’s GDP growth objectives and the role of infrastructure development towards the same.
Infrastructure development is a critical driver of economic growth and development, and a reliable source of funding is essential to support the timely and efficient deployment of large-scale infrastructure projects.
Consequently, in response to this need, the National Bank for Financing Infrastructure and Development Act, 2021 was introduced by the finance minister on March 22, 2021. This was the return of Development Financial Institutions (DFIs) in the country after a few decades.
The Act received the assent of the President on March 28, 2021 and has come into force effective April 19, 2021.
NaBFID aims to achieve infrastructure development objectives – responsibly and sustainably.
NaBFID shall be regulated and supervised by RBI as an All India Financial Institution (AIFI) under sections 45L and 45N of the RBI Act, 1934, respectively.
Mission
Be the principal enabler for infrastructure financing with an emphasis on innovation, environment and sustainability.
Vision
Be a globally recognized strong provider of impact investment, catalysing infrastructure funding for transformative growth of India.
Significance
- India as an economy is witnessing sustainable growth in its GDP. It has ambition to achieve US$ 5 trillion and, it is imperative for infrastructure investment to grow annually at the rate of 8-10% over the next 5 years. The Indian government has taken steps in this direction, with the ambitious National Infrastructure Plan (NIP) having outlaid an investment of ₹146 lakh crore across 8,900 diverse infrastructure projects.
- The significance of NaBFID lies in its potential to play a key role in serving various purposes across infrastructure financing and provide a more stable source of funding. It will stimulate economic development and employment creation, improve the efficiency and transparency of infrastructure development in the country, through the adoption of best practices across project lifecycles.
- NaBFID will also work towards developing a deep and liquid market for bonds, loans, and derivatives for infrastructure financing. It will specifically facilitate the development of relevant electronic and negotiated markets, enabling fair and accessible trade and exchange.
- NaBFID will play a pivotal role in helping India meet its arduous infrastructural resolve, by providing the necessary financing, expertise, technology, and analytics to support the development of this sector.
Capital Structure
During the year, the Government of India infused capital of ₹20,000 crores. As per the notification dated February 7, 2022, ₹20,000 crores of the share capital of the Institution stood allotted to the Central Government. The entire shareholding of the Institution is currently held by the Government of India.
Products & Services
- NaBFID is expected to provide a supporting, technology-enabled ecosystem across the life-cycle of infrastructure projects as a provider, enabler, and catalyst for infrastructure financing.
- It will work towards directly or indirectly lending, investing, and attracting investments from private sector investors and institutional investors for infrastructure projects located entirely or partly in India. The harmonized list of sectors prescribed by the Central Government includes Transport and Logistics (Roads, Ports, Airports, Railways, Inland Waterways), Energy, Water and Sanitation, Communication, and Social and Commercial Infrastructure.
- The instruments and services extended to fund such project financing requirements will be subject to the NaBFID Lending Rate (NLR)as applicable, and will range across the following types, expanding with time and market demand:
- Term Loans (Greenfield, brownfield, etc.)
- Bonds or Debentures
- Guarantees (Bid bonds, mobilization/advance payment guarantees, performance guarantees)
- Letter of Comfort (Capex LC)
- Additionally, NaBFID will provide equity investment opportunities through Investment Trusts, bond subscription services, specific structured products for project development, and ESG-focused lending.
- It is also committed to the development of various bonds and derivative markets, including domestic capital bonds, foreign currency bonds, and green bonds – while ensuring investor protection and the implementation of robust adjudication systems.
- NaBFID will also coordinate with the Central and state governments, regulators, financial institutions, institutional investors, and other relevant stakeholders, to expand upon several institutional capabilities, by adopting data-driven appraisals, credit monitoring, and modern technology to digitize processes throughout the project lifecycle.
Board structure
There are 10-members in the board including:
- A chairman (currently Mr. K.V. Kamath)
- 3- Independent Directors
- 2- Directors, one Director nominated by the Central Government (Joint Secretary, Department of Financial Services, Ministry of Finance) and another Director nominated by the Central Government (Special Secretary – Logistics, Department for Promotion of Industry and Internal Trade) respectively
- One Managing Director
- 3- Deputy Managing Director as Chief Risk officer, Chief Finance officer and Lending & project finance.
Frequently Asked Questions (FAQ)
NaBFID stands for?
National Bank for Financing Infrastructure and Development.
when did the NaBFID come into force?
April 19, 2021
Where is the headquarter of NaBFID?
The headquarters of NaBFID is in Mumbai.
NaBFID shall be regulated and supervised by RBI as an All India Financial Institution (AIFI) under sections?
45L and 45N of the RBI Act, 1934, respectively.