Summary: On September 12, 2024, the Ministry of Corporate Affairs (MCA) officially designated the National Bank for Financing Infrastructure and Development (NaBFID) as a public financial institution under the Companies Act, 2013. This notification follows the bank’s establishment in 2021 through an Act of Parliament aimed at addressing infrastructure financing gaps in India. The designation aligns NaBFID with other public financial institutions defined under Section 2(72) of the Companies Act, which include major entities like LIC and certain development finance companies. NaBFID’s role is pivotal in supporting infrastructure projects by facilitating long-term non-recourse finance and fostering investment in sectors such as transport, energy, water, sanitation, and social infrastructure. This recognition will bolster NaBFID’s capacity to attract investments and provide a technology-enabled ecosystem for infrastructure development, thus significantly contributing to the nation’s economic growth.
MCA Notification dated 12th September 2024 for National Bank for Financing Infrastructure and Development
In exercise of the powers conferred by sub-clause (v) of clause (72) of Section 2 of the Companies Act, 2013 (18 of 2013), the Central Government, in consultation with the Reserve Bank of India, hereby notifies the following institution as a public financial institution, namely:-
” National Bank for Financing Infrastructure and Development”
Section 2 sub-section 72 of Companies Act 2013 defines Public Financial Institutes as
“public financial institution” means—
(i) the Life Insurance Corporation of India, established under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956);
(ii) the Infrastructure Development Finance Company Limited, referred to in clause (vi) of sub-section (1) of section 4A of the Companies Act, 1956 (1 of 1956) so repealed under section 465 of this Act;
(iii) specified company referred to in the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002);
(iv) institutions notified by the Central Government under sub-section (2) of section 4A of the Companies Act, 1956 (1 of 1956) so repealed under section 465 of this Act;
(v) such other institution as may be notified by the Central Government in consultation with the Reserve Bank of India:
Provided that no institution shall be so notified unless—
(A) it has been established or constituted by or under any Central or State Act; or
(B) not less than fifty-one per cent. of the paid-up share capital is held or controlled by the Central Government or by any State Government or Governments or partly by the Central Government and partly by one or more State Governments
What is National Bank for Financing Infrastructure and Development (NaBFID)The National Bank for Financing Infrastructure and Development (NaBFID) is a specialized Development Finance Institution in India aimed at supporting the country’s infrastructure sector, which can significantly gain from an enabling credit flow by means of attractive instruments and channelized investment.
NaBFID was set up in 2021, by an Act of the Parliament (The National Bank for Financing Infrastructure and Development Act, 2021), with the essential objectives of addressing the gaps in long-term non-recourse finance for infrastructure development, strengthening the development of bonds and derivatives markets in India, and sustainably boosting the country’s economy.
Functions of NaBFID:
NaBFID is expected to provide a supporting, technology-enabled ecosystem across the life-cycle of infrastructure projects as a provider, enabler, and catalyst for infrastructure financing. NaBFID will work towards directly or indirectly lending, investing, and attracting investments from private sector investors and institutional investors for infrastructure projects located entirely or partly in India. The harmonized list of sectors prescribed by the Central Government includes Transport and Logistics (Roads, Ports, Airports, Railways, Inland Waterways), Energy, Water and Sanitation, Communication, and Social and Commercial Infrastructure.
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