Establishment of National Bank for Financing Infrastructure and Development (NBFID) will boost India’s growth but it will have its own set of challenges. Discuss.
National Bank for Financing Infrastructure and Development aims at:
- Lend, invest via long-term loans
- Attract financing & investment
- Development of bond/capital market for infrastructure financing
Functions of NBFID
- Extending loans and advances for infrastructure projects, taking over or refinancing such existing loans, etc.
- Organize/facilitate foreign investment
- Dispute resolution and consultancy services.
- Provide funds for National Infrastructure Pipeline.
- Funding from the central government, RBI, World Bank, ADB, and other financial instruments, etc.
- As India moves on the path of structural changes in the economy, special development finance institutions may help in providing the required impetus, finances, and expertise without affecting other aspects of the economy.
- No investigation can be initiated against employees of NBFID without prior sanction from the government. This makes it powerful without accountability.
- Courts will also require prior sanction for taking cognizance of offenses.
- If unworthy loans are given, NBFID would turn into another bank with disproportionately high NPAs.
- Project delivery within stipulated time remains a challenge in India.
- Dispute resolution and clearance aspects also delay infrastructure development.
Along with ready/exclusive financing for infrastructure, the focus needs to simultaneously be on timely completion and quality management to reap the benefits of infrastructure development, else NBFID could turn into another burden.