The National Bank for Financing Infrastructure and Development Act, 2021

Summary of The National Bank for Financing Infrastructure and Development Act, 2021
Overview The National Bank for Financing Infrastructure and Development Act, 2021, establishes a specialized bank to facilitate long-term financing for infrastructure projects in India, enhancing the country's development through strategic financial support.
Key Aspects
1. Establishment & Structure
• Body Corporate: Established with perpetual succession and a common seal.
• Headquarters: Located in Mumbai, with the flexibility to establish branches/offices within or outside India.
2. Objectives
• Developmental: To coordinate with various stakeholders for streamlined infrastructure financing.
• Financial: To lend/invest in infrastructure projects, promoting sustainable economic growth.
3. Capital & Ownership
• Authorised Share Capital: ₹100,000 crore, divided into fully paid-up shares of ₹10 each.
• Government Holding: The Central Government must hold at least 26% of the shares.
4. Functions & Powers
• Lending & Advances: With or without security, for infrastructure projects.
• Financial Instruments: Issue of participation certificates, debt securities, and promotion of securitisation.
• Intermediary Role: Acting as a financial intermediary for infrastructure development.
• Assistance: Providing technical, legal, marketing, and administrative support.
• Borrowing: Ability to borrow from the Reserve Bank of India under specified conditions.
5. Governance & Oversight
• Board of Directors: Oversees the bank's operations (composition and terms not fully detailed in the provided context).
• Accountability: Subject to audits, with requirements for balance sheets and annual reports.
6. Legislative Amendments
• Banking Regulation Act, 1949: Amended to accommodate the new bank's establishment and operations.
• Other Acts: Potential amendments to align with the bank's functional requirements (partially specified).
Limitations of the Provided Context
• Detailed Governance Structure: Specifics of the Board of Directors' composition, terms, and management hierarchy beyond the Chairperson's role are not provided.
• Comprehensive Functional Details: Only highlighted functions are summarized; a full list of powers and functions is not available in the context.
• Financial Provisions Beyond Share Capital and Borrowing: Detailed financial regulations and oversight mechanisms are partially covered.

Legislative History:
The National Bank for Financing Infrastructure and Development Act, 2021

Source: India Code and Ministry of Finance Official Records

Short Title -The National Bank for Financing Infrastructure and Development Act, 2021
Act Number / Year - Act No. 17 of 2021
India Code Act ID - 202117
Introduced In - Lok Sabha
Presidential Assent Date - March 28, 2021
Official Gazette Publication - March 28, 2021
Enforcement Date - April 19, 2021
Nodal Ministry - Ministry of Finance

Precedent & Statutory Rationale
1. The Financing Gap in Long-Term Infrastructure Projects:
o Prior to 2021, India's massive infrastructure push faced severe structural bottlenecks in long-term, non-recourse debt financing. Traditional commercial banks were constrained by asset-liability mismatch risks when lending for long-gestation infrastructure projects, and domestic corporate bond markets lacked depth for deep-tier financing.
2. Institutionalizing a Specialized Development Financial Institution (DFI):
o Grounded in national economic strategy to accelerate infrastructure development under frameworks like the National Infrastructure Pipeline (NIP), the legislation was enacted to establish a specialized DFI—NaBFID—equipped to act as a provider, enabler, and catalyst for long-term infrastructure financing while fostering domestic bond and derivative markets.

Parliamentary Trajectory & Enactment
• Formulation: Developed and piloted by the Ministry of Finance under Union Finance Minister Nirmala Sitharaman, following structural announcements made in the Union Budget.
• Parliamentary Passage: Introduced in Parliament, reviewed by the relevant Parliamentary Standing Committee, and subsequently passed by both the Lok Sabha and the Rajya Sabha during the budget session of March 2021.
• Presidential Assent: Received formal Presidential Assent on March 28, 2021, entering the statute book as Act No. 17 of 2021.
• Enforcement: Brought into active operational force starting April 19, 2021, through central notifications.