Vidhi Codex

The National Bank for Financing Infrastructure and Development Act, 2021

The National Bank for Financing Infrastructure and Development Act, 2021

Finance202148 sections7 chapters

The National Bank for Financing Infrastructure and Development Act, 2021, establishes a specialized national bank (NaBFID) to bridge India’s massive infrastructure funding gap and foster development. It regulates the bank's internal governance, its power to lend for massive projects, and its role in maturing India’s bond markets. The Act applies to the institution's directors, government shareholders, and any private investors or other licensed development banks. This law matters because traditional banks struggle with long-term project risks, often leading to systemic financial instability. By providing reliable, low-cost capital, the Act helps build essential national projects like roads and power plants to drive sustainable economic growth.

Start reading →Read full ActSections

Chapter I PRELIMINARY →

  1. 1Short title, extent and commencement.
  2. 2Definitions.

Chapter II ESTABLISHMENT AND INCORPORATION OF INSTITUTION →

  1. 3Establishment and incorporation of Institution.
  2. 4Purposes and objectives of Institution.
  3. 5Authorised share capital.

Chapter III BOARD OF DIRECTORS AND MANAGEMENT →

  1. 6Board of Directors.
  2. 7Management
  3. 8Delegation of powers.
  4. 9Term of office and other terms and conditions of service of Chairperson and other directors of Board.
  5. 10Disqualification and removal of directors from office.
  6. 11Removal of Chairperson and other directors in certain cases.
  7. 12Vacation and resignation of office by directors.
  8. 13Meetings of Board.
  9. 14Defects in appointment not to invalidate acts, etc.
  10. 15Committees of Board.
  11. 16Disclosure of interest by members of Board or of committees.

Chapter IV ACTIVITIES OF INSTITUTION →

  1. 17Functions and powers of Institution.
  2. 18Prohibited business.
  3. 19Related party transactions.
  4. 20Performance review of Institution.

Chapter V GOVERNMENT GRANTS, GUARANTEES AND OTHER CONCESSIONS →

  1. 21Grants and contribution.
  2. 22Concessional rate of Government guarantee.
  3. 23Hedging costs.

Chapter VI ACCOUNTS, AUDIT AND REPORT →

  1. 24Disposal of profit accruing to Institution, to reserve fund.
  2. 25Preparation of balance sheet and accounts.
  3. 26Audit.
  4. 27Returns and report.

Chapter VII MISCELLANEOUS →

  1. 28Receivables to be held in trust.
  2. 29Setting up of other development financial institution.
  3. 30Officers and employees.
  4. 31Powers of Central Government to make rules.
  5. 32Powers of Board to make regulations.
  6. 33Rules and regulations to be laid before Parliament.
  7. 34Protection of action taken in good faith.
  8. 35Sanction for enquiry, inquiry, investigation and prosecution.
  9. 36Appointment of directors by Institution to prevail.
  10. 37Validity of loan or advance not to be questioned.
  11. 38Obligations as to fidelity and secrecy.
  12. 39Adjudication.
  13. 40Indemnity of directors.
  14. 41Bankers’ Books of Evidence Act, 1891 to apply in relation to the Institution.
  15. 42Section 34A and 36AD of the Banking Regulation Act, 1949 to apply to Institution.
  16. 43Liquidation of Institutions.
  17. 44Powers of Central Government to issue directions.
  18. 45Overriding effect of this Act.
  19. 46Power to remove difficulties.
  20. 47Amendment of Act 2 of 1934.
  21. 48Amendment of Act 10 of 1949.

PDF: pending for this language.