New Delhi, March 22 (SocialNews.XYZ) The much talked-about development finance institution to be set up by the Centre will be allowed to acquire businesses of other institutions involved in infrastructure financing of projects.
The government introduced The National Bank For Financing Infrastructure And Development (NABFID) Bill, 2021 in the Lok Sabha on Monday.
Among the various functions of the institution, the bill said that it can "acquire an undertaking including the business, assets and liabilities of any institution, the principal object of which is the promotion or development of infrastructure financing for projects located in India, or partly in India and partly outside India".
Apart from lending for infrastructure projects, it will extend loans and advances to any company or statutory corporation or trust or any financial institution funding infrastructure, for the purposes of providing financial assistance for infrastructure projects located in India, or partly in India and partly outside India.
It will also take over or refinance existing loans extended by a lender for infrastructure projects located in India, or partly in India and partly outside India and transfer loans and advances granted by it, with or without the securities, to trusts, for consideration.
The development finance institution will also set aside loans or advances it holds and issue and sell securities based upon such loans or advances so set aside in the form of debt obligations, trust certificates of beneficial interest or other instruments, by whatever name called, and act as a trustee for the holders of such securities.
It will borrow money from the Central government, scheduled banks, financial institutions, mutual funds, any class of persons, and from any other institution or authority or organisation notified by the Central government, on such terms and conditions as may be agreed upon and accept short term loans only for managing asset liability mismatches and not for any other business purpose.
The government will grant or contribute an amount of Rs 5,000 crore to the institution in the form of cash or marketable government securities by the end of the first financial year from the establishment of institution.
As per the bill, the aim of setting up the institution is to address market failures that stem from the long-term, low margin and risky nature of infrastructure financing.
"The institution shall be wholly owned by the Central government to begin with in order to foster confidence on its stability and sustainability and to raise resources at competitive rates," it said.
The government will provide the institution with grants and contributions, guarantees at concessional rates for foreign borrowings and any other concessions.
Dilution or sale of stake may be considered once the institution has achieved tability and scale in its business operations but the government would at all times hold 26 per cent of the paid-up voting equity share capital of the institution.
Source: IANS
Gopi Adusumilli is a Programmer. He is the editor of SocialNews.XYZ and President of AGK Fire Inc.
He enjoys designing websites, developing mobile applications and publishing news articles on current events from various authenticated news sources.
When it comes to writing he likes to write about current world politics and Indian Movies. His future plans include developing SocialNews.XYZ into a News website that has no bias or judgment towards any.
He can be reached at gopi@socialnews.xyz
This website uses cookies.