New Delhi, March 22 (IANS): The much discussed development finance institution to be set up by the Center will be able to acquire companies from other institutions involved in the infrastructure financing of projects.
The government unveiled the National Bank’s Bill for Infrastructure and Development Financing (NABFID), 2021 in Lok Sabha on Monday.
Among the various functions of the institution, the bill states that it can “acquire an enterprise comprising the assets, assets and liabilities of any institution, the main purpose of which is the promotion or development of infrastructure financing for projects located in India, or partly in India and partly outside India “.
In addition to granting loans for infrastructure projects, it will extend loans and advances to any company or legal company or trust or any financial institution that finances infrastructure, for the purpose of providing financial assistance for infrastructure projects located in India, or partly in India and partly to the outside India.
In addition, it will take over or refinance existing loans granted by a lender for infrastructure projects located in India, or partly in India and partly outside India, and will transfer loans and advances granted by it, with or without securities, to trusts. , for consideration.
The development financial institution will also set aside loans or advances that it holds and issues and sells securities based on such loans or advances, then set aside in the form of debt obligations, trust certificates of beneficial interest or other instruments, by whatever name is called, and will act as trustee for the holders of such securities.
It will borrow money from the central government, scheduled banks, financial institutions, mutual funds, any class of people and from any other institution or authority or organization notified by the central government, under the terms and conditions agreed upon and accepted short-term loans only for the management of misalignments of activities and not for any other business purpose.
The government will grant or contribute to the institution in the amount of Rs 5,000 crore in the form of cash or negotiable government bonds by the end of the first financial year after the establishment of the institution.
As per the bill, the goal of the institution’s establishment is to address market failures that arise from the long-term, low-margin and risky nature of infrastructure financing.
“The institution must be wholly owned by the central government to begin in order to foster confidence in its stability and sustainability and to increase resources at competitive rates,” he said.
The government will provide the institution with grants and grants, guarantees at subsidized rates for foreign loans and any other grants.
The dilution or sale of the holding may be considered once the institution has reached tability and scale in its commercial operations, but the government will at all times hold 26% of the paid-up voting share capital of the institute.