The National Bank for Financing Infrastructure and Development (NaBFID) is playing a crucial role in supporting India’s infrastructure development. With a goal to disburse approximately ₹60,000 crore by the end of the fiscal year, NaBFID has already lent ₹8,000 crore in the first quarter. This essay explores the significance of NaBFID and its contribution to India’s infrastructure financing.

  1. NaBFID: Empowering Infrastructure Financing The establishment of NaBFID through the NABFID Act, 2021, passed by the Parliament on March 28, 2021, positions it as the principal entity for infrastructure financing in India. Its primary objective is to facilitate long-term infrastructure financing and promote the development of bonds and derivatives markets necessary for this purpose.
  2. Regulatory Framework: All India Financial Institution NaBFID operates as an All India Financial Institution (AIFI), placing it under the regulation and supervision of the Reserve Bank of India (RBI). This designation makes NaBFID the fifth sector-specific AIFI in the country. The other four AIFIs are the Export-Import Bank of India (Exim Bank), National Bank for Agriculture and Rural Development (NABARD), Small Industries Development Bank of India (SIDBI), and National Housing Bank (NHB).
  3. Organizational Structure: The corporate office of NaBFID is situated in Gurugram, Haryana. The constitution of NaBFID’s board, as outlined in the NABFID Act, is as follows:
  • Chairman appointed by the Central Government in consultation with the RBI.
  • Managing Director appointed by the board.
  • Up to three Deputy Managing Directors appointed by the board.
  • Two directors from the Central Government.
  • Up to three directors appointed by the shareholders.
  • Up to three Independent Directors.
  1. NaBFID’s Offerings: Unsecured Non-Convertible Debt Securities NaBFID is currently offering 7.43% interest on unsecured non-convertible debt securities with a tenor of 10 years. This issuance represents the largest debt offering by a national-level institution, highlighting NaBFID’s commitment to financing infrastructure projects.

Important Points:

  • National Bank for Financing Infrastructure & Development (NaBFID) aims to disburse ₹60,000 crore by the end of the fiscal year, having already lent ₹8,000 crore in the first quarter.
  • NaBFID is the principal entity for infrastructure financing in India, established through the NABFID Act, 2021.
  • Its primary objective is to support long-term infrastructure financing and develop the bonds and derivatives markets necessary for infrastructure financing.
  • NaBFID is regulated and supervised by the Reserve Bank of India (RBI) as an All India Financial Institution (AIFI).
  • The other four sector-specific AIFIs in India are the Export-Import Bank of India (Exim Bank), National Bank for Agriculture and Rural Development (NABARD), Small Industries Development Bank of India (SIDBI), and National Housing Bank (NHB).
  • The corporate office of NaBFID is located in Gurugram, Haryana.
  • The board of NaBFID consists of a Chairman appointed by the Central Government in consultation with the RBI, a Managing Director appointed by the board, up to three Deputy Managing Directors appointed by the board, two directors from the Central Government, up to three directors appointed by the shareholders, and up to three Independent Directors.
  • NaBFID offers 7.43% interest on unsecured non-convertible debt securities with a tenor of 10 years, representing the largest debt issuance by a national-level institution.
Why In News

National Bank for Financing Infrastructure & Development (NaBFID) has set an ambitious target to disburse approximately ₹60,000 crore by the end of this fiscal year, after successfully lending ₹8,000 crore in the first quarter alone. The bank’s robust lending activity reflects its commitment to driving infrastructure development and stimulating economic growth through strategic financial support.

MCQs about NaBFID
  1. What is the primary objective of the National Bank for Financing Infrastructure & Development (NaBFID)?
    A. To promote agricultural development in rural areas.
    B. To facilitate long-term infrastructure financing.
    C. To regulate the housing market in India.
    D. To provide financial support for small industries.
    Correct Answer: B. To facilitate long-term infrastructure financing.
    Explanation: NaBFID’s primary objective is to support the development of long-term infrastructure financing in India and promote the necessary financial markets for infrastructure financing.
  2. Which institution regulates and supervises NaBFID?
    A. Ministry of Finance.
    B. Securities and Exchange Board of India (SEBI).
    C. Reserve Bank of India (RBI).
    D. National Stock Exchange (NSE).
    Correct Answer: C. Reserve Bank of India (RBI).
    Explanation: NaBFID is regulated and supervised as an All India Financial Institution (AIFI) by the RBI.
  3. What is the main purpose of establishing NaBFID as an All India Financial Institution (AIFI)?
    A. To regulate the stock market in India.
    B. To provide financial support to small businesses.
    C. To facilitate infrastructure financing and development.
    D. To promote agricultural and rural development.
    Correct Answer: C. To facilitate infrastructure financing and development.
    Explanation: The primary purpose of establishing NaBFID as an All India Financial Institution (AIFI) is to support the development of long-term infrastructure financing in India, including the necessary financial markets for infrastructure projects. It focuses on driving infrastructure development rather than regulating the stock market or providing support to small businesses.

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