NaBFID: Relevance
- GS 3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
NaBFID: Context
- Recently, RBI said that NaBFID will be regulated and supervised as an All India Financial Institution (AIFI) under the Reserve Bank of India Act, 1934.
NaBFID: Key points
- The National Bank for Financing Infrastructure and Development (NaBFID) Act, 2021, was passed in March 2021 and it came into force in April 2021.
- It becomes the fifth AIFI after EXIM Bank, NABARD, NHB and SIDBI.
What is NaBFID?
- The National Bank for Financing Infrastructure and Development (NBFID) is set up as the principal development financial institution (DFIs) for infrastructure financing.
- NBFID is set up as a corporate body with authorised share capital of one lakh crore rupees.
- Shares of NBFID may be held by entities like central government, multilateral institutions, sovereign wealth funds, banks and any other institution prescribed by the central government.
- Initially, the central government will own 100% shares of the institution which may subsequently be reduced up to 26%.
What is DFI?
- DFIs are set up to provide long-term finance for such segments of the economy where the risks involved are beyond the acceptable limits of commercial banks and other ordinary financial institutions.
- DFIs, unlike banks, do not accept deposits from people.
- Source of funds: market, government, as well as multi-lateral institutions.
नेशनल बैंक फॉर फाइनेंसिंग इंफ्रास्ट्रक्चर एंड डेवलपमेंट (एनएबीएफआईडी)