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Lok Sabha, on Monday, passed the National Bank for Financing Infrastructure and Development Bill 2021, that among other things, seeks to establish a statutory institution to support the development of long term infrastructure financing in India and to carry on the business of financing infrastructure.
The statutory institution called National Bank for Financing Infrastructure and Development (NABFID) would have developmental and financial objectives.
The lower house passed this Bill through a voice vote after Finance Minister Nirmala Sitharaman replied to the Bill’s discussion.
To begin with, NABFID will be entirely owned by the central government. The centre also proposes to provide this institution with grants and contributions, guarantees at concessional rates for foreign borrowings and any other concessions. The Bill also paves the way for private sector promoted DFIs to come to the market after obtaining approval from the RBI.
While NABFID will get a ten-year income tax holiday, those DFIs promoted by the private sector and coming through the RBI approval route will get five year tax holiday to begin with and extendable by another five years.
All the hedging costs incurred by both NABFID and other DFIs (private ones) for raising foreign currency resources are proposed to be reimbursed by the government, adding to the attractiveness of this structure.
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