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What is the News?
Government has set a target of about Rs 1 trillion for the National Bank for Financial Infrastructure and Development(NaBFID) for sanctioning loans to the infrastructure sector in the next financial year.
What is NaBFID?
NaBFID has been set up as a Development Financial Institution(DFI) to support the development of long-term infrastructure projects.
NaBFID shall be regulated and supervised as an All India Financial Institution(AIFI) by the Reserve Bank of India under the Reserve Bank of India Act, 1934.
It shall be the fifth AIFI after EXIM Bank, NABARD, NHB and SIDBI.
How will NaBFID fund projects?
NaBFID with a capital base of Rs 20,000 crore will invest in infrastructure projects in India and outside with a focus towards prioritizing systemic risk mitigation and credit enhancement. It will provide funding in the public sector as well as the private sector.
It will get a 10-year tax concession so that it can provide long-term funds at an affordable cost to the infrastructure sector.
It can also issue debt securities and promote securitisation of the loan portfolios of companies engaged in the development and financing of infrastructure to create and develop a secondary market for securitisation receivables.
Moreover, it can also get government guarantees at a concessional rate of up to 0.1% for borrowing from multilateral institutions, sovereign wealth funds and other such foreign institutions.
Source: This post is based on an article “Govt sets Rs 1-trillion infrastructure lending target for DFI” published in Business Standard on 24th March 2022
