The National Bank for Financing Infrastructure and Development (NBFID) Bill, 2021 |The LexSphere Library

SECTION Section 1

Untitled Section

•THE NATIONAL BANK FOR FINANCING INFRASTRUCTURE AND

•DEVELOPMENT BILL, 2021

•——————

•ARRANGEMENT OF CLAUSES

•——————

SECTION Section 10

Untitled Section

•CHAPTER III

•B

•OARD OF DIRECTORS AND MANAGEMENT

SECTION Section 100

Untitled Section

30.(1) The Institution may appoint such number of officers and other employees as it

•considers necessary or desirable for the efficient performance of its functions and determine

•the terms and conditions of their appointment of service.

(2)The duties and conduct, terms and other conditions of service including their

•salaries and allowances and the establishment and maintenance of provident fund or any

•other fund for the benefit of the officers and other employees of the Institution appointed

•under sub-section (1) shall be such as may be specified by regulations:

•Provided that the salaries and allowances payable to the officers and employees shall

•be determined by the Nomination and Remuneration Committee guided by the market

standards.

(3)The Institution may depute any officer or any member of its staff for such period

•and on such terms and conditions as it may determine, to any other institution including an

•infrastructure finance or development institution.

(4)The Institution may receive or take on deputation any officer or other employee

•from any institution including an infrastructure finance or development institution, for such

•period and on such terms and conditions as may be specified by regulations.

(5)Nothing contained in this section shall empower the Institution to depute any

•officer or member of its staff to any institution on any salary, emoluments or other terms and

•conditions which is or are less favourable to him than that or those to which he is entitled to

•immediately before such deputation.

SECTION Section 101

Untitled Section

31.(1) The Central Government may, by notification, make rules to carry out the

•provisions of this Act.

(2)In particular, and without prejudice to the generality of the foregoing power, such

•rules may provide for all or any of the following matters, namely:—

(a)institutions that may hold shares of the Institution under sub-section (3) of

SECTION Section 102

Untitled Section

•section 5;

(b)the manner of election of directors by shareholders under clause ( e) of

•sub-section (1) of section 6;

(c)the terms and conditions of induction of independent directors to the Board

•under sub-section (5) of section 6;

(d)the fees and reimbursements in respect of independent directors under

•sub-section (3), and the term of office and other terms and conditions of service of, the

•Chairperson, Managing Director, Deputy Managing Directors and other directors of

•Board under sub-section (5), of section 9;

(e)manner of disclosure of interest by members of Board and of committees

•under sub-section (1) of section 16;

(f)the threshold for determination of beneficial interest by directors of the

•Institution or any relative of such director under the Explanation to sub-section (3) of

SECTION Section 103

Untitled Section

•section 18;

(g)conditions subject to which the Institution may enter into a contract or an

•arrangement under sub-section (1) of section 19;

(h)the parameters on the basis of which the external agency shall review the

•performance of the Institution under sub-section (2) of section 20;

(i)the rate of fees for Government under section 22;

(j)the form and manner in which the balance-sheet and accounts of the Institution

•shall be prepared under sub-section (1) of section 25;

•Officers and

employees.

•Power of

•Central

•Government

•to make rules.

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(k)any other matter which is to be, or may be, prescribed.

SECTION Section 104

Untitled Section

32.(1) The Board may, with the previous approval of the Central Government and in

•consultation with the Reserve Bank, by notification, make regulations not inconsistent with

•the provisions of this Act to provide for all matters for which provision is necessary or

•expedient for the purpose of giving effect to the provisions of this Act.

(2)In particular, and without prejudice to the generality of the foregoing power, such

•regulations may provide for all or any of the following matters, namely:—

(a)the salaries and allowances payable to the Managing Director and Deputy

•Managing Directors under sub-section (4) of section 9;

(b)the times and places and rules of procedure in regard to the transaction of

•business of the Board under sub-section (1) of section 13;

(c)the times and places and rules of procedure in regard to the transaction of

•business of the committees and their functions under sub-section (5) of section 15;

(d)amount for transactions under the proviso to sub-section (1) of section 19;

(e)the terms and other conditions of service of the officers and employees of the

•Institution under sub-section ( 2) and the terms and conditions of deputation under

•sub-section (4), of section 30;

(f)the mechanism under sub-section ( 1) of section 39 for the purpose of

•determining the penalties specified under sub-section (5) of section 16 and sub-section (5)

•of section 19;

(g)any other matter which is to be, or may be, specified by regulations.

SECTION Section 105

Untitled Section

33.Every rule and every regulation made under this Act shall be laid, as soon as may

•be after it is made, before each House of Parliament, while it is in session, for a total period of

•thirty days which may be comprised in one session or in two or more successive sessions,

•and if, before the expiry of the session immediately following the session or the successive

•sessions aforesaid, both Houses agree in making any modification in the rule or regulation or

•both Houses agree that the rule or regulation should not be made, the rule or regulation shall

•thereafter have effect only in such modified form or be of no effect, as the case may be; so,

•however, that any such modification or annulment shall be without prejudice to the validity

•of anything previously done under that rule or regulation.

SECTION Section 106

Untitled Section

34.No suit, prosecution or other legal proceedings shall lie against the Institution or

•its Chairperson or other directors, employees or officers for anything which is done in good

•faith or intended to be done under this Act, or the rules or the regulations made thereunder,

•including in respect of assets created or transferred to the Institution.

SECTION Section 107

Untitled Section

35.(1) No investigation agency, including but not limited to Police, Central Bureau of

•Investigation, Serious Fraud Investigation Office, Directorate of Enforcement and such other

•agencies, shall conduct any enquiry or inquiry or investigation into any offence alleged to

•have been committed under any law, in relation to any recommendation made or decision

•taken by the Chairperson or other directors, employees or officers of the Institution in

•discharge of his official functions or duties, without the previous approval of—

(a)the Central Government, where the offence is alleged have to been committed

•by the Chairperson or other directors; or

(b)the Managing Director, where the offence is alleged to have been committed

•by an employee or officer of the Institution:

•Provided that no such approval shall be necessary for cases involving arrest of

•a person on the spot on the charge of accepting or attempting to accept any undue

•advantage for himself or for any other person:

•Power of

•Board to make

regulations.

•Rules and

•regulations to

•be laid before

Parliament.

•Protection of

•action taken

•in good faith.

•Sanction for

•enquiry,

•inquiry,

•investigation

•and

prosecution.

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•Provided further that the Central Government or the Managing Director, as the

•case may be, shall convey its decision within a period of three months, and such

•period may, for reasons to be recorded in writing by the Central Government or the

•Managing Director, as the case may be, be extended by a further period of one month:

•Provided further that failure of Central Government or the Managing Director to

•convey its decision under this section within the stipulated time period shall not be

•considered as deemed approval for initiation of any enquiry or inquiry or investigation.

Explanation.—For the purposes of this sub-section, the expression "undue

•advantage" shall have the meaning as assigned to it under the Prevention of Corruption

•Act, 1988.

(2)No court shall take cognizance of an offence punishable under any law alleged to

•have been committed by the Chairperson or other directors, employees or officers of the

•Institution for which a sanction to conduct any enquiry or inquiry or investigation was

•granted under sub-section (1), except with the previous sanction of—

(a)the Central Government, where the offence is alleged to be committed by the

•Chairperson or other directors; or

(b)of the Managing Director, where the offence is alleged to be committed by an

•employee or officer of the Institution:

•Provided that the Central Government or the Managing Director shall, after the

•receipt of the proposal requiring sanction for prosecution under this sub-section,

•endeavour to convey the decision on such proposal within a period of three months

•from the date of its receipt:

•Provided further that in case where, for the purpose of grant of sanction for

•prosecution, legal consultation is required, such period may, for the reasons to be

•recorded in writing, be extended by a further period of one month:

•Provided also that failure of the Central Government or the Managing Director to

•convey its decision under this sub-section within the time specified under the first

•proviso shall not be considered as deemed approval for the initiation of prosecution.

SECTION Section 108

Untitled Section

36.(1) Where any arrangement entered into by the Institution with a borrowing entity

•while granting loans and advances provides for the appointment or nomination by the

•Institution of one or more directors of such entity, such provision and any appointment of

•directors made in pursuance thereof shall be valid and effective notwithstanding anything to

•the contrary contained in the Companies Act, 2013, or in any other law for the time being in

•force or in the memorandum and articles of association or any other instrument relating to the

•entity, and any provision regarding share qualification, age limit, number of directorships,

•removal from office of directors and such like conditions contained in any such law or

•instrument aforesaid, shall not apply to any director appointed by the Institution in pursuance

•of the arrangement as aforesaid.

(2)Any director appointed as aforesaid shall—

(a)be deemed to be an independent director under the Companies Act, 2013 for

•the purpose of immunities available to independent directors;

(b)hold office during the pleasure of the Institution and may be removed or

•substituted by any person by order in writing of the Institution;

(c)not incur any obligation or liability by reason only of his being a director or

•for anything done or omitted to be done in good faith in the discharge of his duties as

•a director or anything in relation thereto;

(d)not be liable to retirement by rotation and shall not be taken into account for

•computing the number of directors liable to such retirement.

•49 of 1988.

•Appointment

•of directors by

•Institution to

prevail.

•18 of 2013.

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SECTION Section 109

Untitled Section

37.(1) Notwithstanding anything to the contrary contained in any other law for the

•time being in force, the validity of any loan or advance granted by the Institution in pursuance

•of the provisions of this Act shall not be called in question merely on the ground of

•non-compliance with the requirements of such other law as aforesaid or of any resolution,

•contract, memorandum, articles of association or other instrument.

(2)Nothing in this section shall enable any company to obtain any loan or advance

•where the instrument relating to the constitution of such company does not empower such

•company to do so.

SECTION Section 11

Untitled Section

6.Board of directors.

SECTION Section 110

Untitled Section

38.(1) The Institution shall not, except as otherwise required by this Act or by any

•other law, divulge any information relating to, or to the affairs of, its constituents except in

•circumstances in which it is, in accordance with the law or practice and usage customary

•among bankers, necessary or appropriate for the Institution to divulge such information.

(2)Every director, member of a committee, auditor, officer or other employee of the

•Institution or of the Reserve Bank, whose services are utilised by the Institution under the

•provisions of this Act, shall, before entering upon his duties, make a declaration of fidelity

•and secrecy in the form set out in the First Schedule.

SECTION Section 111

Untitled Section

39.(1) The Board shall make regulations for setting up a mechanism for the purpose of

•determining the penalties specified under sub-section (5) of section 16 and sub-section (5)

•of section 19.

(2)The regulations shall provide for a reasonable opportunity of being heard, to the

•director or an employee against whom a complaint is made for violating the provisions of

SECTION Section 112

Untitled Section

•section 16 or section 19, as the case may be, and a right to prefer an appeal against any order

•imposing the penalty.

SECTION Section 113

Untitled Section

40.(1) Every director shall be indemnified by the Institution against all losses and

•expenses incurred by him in, or in relation to, the discharge of his duties, except such as are

•caused by his own wilful act or default.

(2)A director shall not be responsible for any other director or for any officer or other

•employee of the Institution or for any loss or expenses resulting to the Institution from the

•insufficiency or deficiency of the value of, or title to, any property or security acquired or

•taken on behalf of the Institution or the insolvency or wrongful act of any debtor or any

•person under obligation to the Institution or anything done in good faith in the execution of

•the duties of his office or in relation thereto.

SECTION Section 114

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41.The Bankers' Books Evidence Act, 1891, shall apply in relation to the Institution as

•if it were a bank as defined in section 2 of that Act.

SECTION Section 115

Untitled Section

42.The provisions of section 34A and section 36AD of the Banking Regulation

•Act, 1949 shall apply to the Institution.

SECTION Section 116

Untitled Section

43.No provision of law relating to the winding up of companies shall apply to the

•Institution and the Institution shall not be placed in liquidation save by order of the Central

•Government and in such manner as it may direct.

SECTION Section 117

Untitled Section

44.Without prejudice to the foregoing provisions of this Act, the Institution shall, in

•the performance of its functions under this Act, be bound by such directions on questions

•of policy as the Central Government may give in writing to it from time to time.

•V alidity of

•loan or

•advance not

•to be

questioned.

•Obligations as

•to fidelity and

secrecy.

Adjudication.

•Indemnity of

directors.

•Bankers’ Books

•of Evidence

•Act, 1891 to

•apply in

•relation to the

Institution.

•10 of 1949.

•Sections 34A

•and 36AD of

•the Banking

•Regulation

•Act, 1949 to

•apply to

Institution.

•Liquidation of

Institution.

•Power of

•Central

•Government to

•issue directions.

•18 of 1891.

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SECTION Section 118

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45.The provisions of this Act shall have effect, notwithstanding anything inconsistent

•therewith contained in any other law for the time being in force or any instrument having

•effect by virtue of any such law.

SECTION Section 119

Untitled Section

46.(1) If any difficulty arises in giving effect to the provisions of this Act, the Central

•Government may, by order, published in the Official Gazette, make such provisions or give

•such directions not inconsistent with the provisions of this Act, as appears to it to be

•necessary or expedient for removing the difficulty:

•Provided that no such order shall be made after the expiry of three years from the date

•of commencement of this Act.

(2)Every order made under this section shall be laid, as soon as may be after it is made,

•before each House of Parliament.

SECTION Section 12

Untitled Section

7.Management.

SECTION Section 120

Untitled Section

47.The Reserve Bank of India Act, 1934 shall be amended in the manner specified in

•the Second Schedule.

SECTION Section 121

Untitled Section

48.The Banking Regulation Act, 1949 shall be amended in the manner specified in the

•Third Schedule.

•Overriding

•effect of this

Act.

•Power to

•remove

difficulties.

•Amendment

•of Act 2 of

SECTION Section 122

Untitled Section

1934.

•Amendment

•of Act 10 of

SECTION Section 123

Untitled Section

1949.

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•THE FIRST SCHEDULE

•[See section 38(2)]

•Declaration of Fidelity and Secrecy

•I do hereby declare that I will faithfully, truly and to the best of my skill and ability

•execute and perform the duties required of me as director, auditor, officer or other employee,

•as the case may be, of the National Bank for Financing Infrastructure and Development and

•which properly relate to the office or position held by me in the said Institution.

SECTION Section 124

Untitled Section

2.I further declare that I will not communicate or allow to be communicated to any

•person not legally entitled thereto any information relating to the affairs of the said Institution

•or to the affairs of any person having any dealing with the said Institution or will I allow any

•such person to inspect or have access to any books or documents belonging to or in the

•possession of the said Institution and relating to the business of the said Institution or the

•business of any person having any dealing with the said Institution.

•Signed before me (Signature)

•20

•THE SECOND SCHEDULE

•(See section 47)

•AMENDMENTS TO THE RESERVE BANK OF INDIA ACT, 1934

SECTION Section 125

Untitled Section

1.In the Reserve Bank of India Act, 1934 (hereinafter referred to as the principal Act),

•in section 2, after clause (ccc), the following clauses shall be inserted, namely:—

•'(ccci) "National Bank for Financing Infrastructure and Development" means

•the Institution established under section 3 of the National Bank for Financing

•Infrastructure and Development Act, 2021;

•(cccii) "other development financial institution" means a development financial

•institution licensed under section 29 of the National Bank for Financing Infrastructure

•and Development Act, 2021;'.

SECTION Section 126

Untitled Section

2.In section 17 of the principal Act,—

(a)in sub-section ( 4G), after the words "or the Small Industries Bank", the

•words "or the National Bank for Financing Infrastructure and Development or other

•development financial institution" shall be inserted;

(b)in sub-section (4-I), after the words "the Industrial Finance Corporation", the

•words ", the National Bank for Financing Infrastructure and Development or other

•development financial institution" shall be inserted;

(c)after sub-section (4K), the following sub-section shall be inserted, namely:—

•"(4L) the making to the National Bank for Financing Infrastructure and

•Development or other development financial institution of loans and advances—

(a)repayable on demand or on the expiry of a fixed period not

•exceeding ninety days, from the date of such loan or advance against the

•security of stocks, funds and securities (other than immovable property)

•in which a trustee is authorised to invest trust money by any law for the

•time being in force in India; or

(b)against the security of bills of exchange or promissory notes,

•arising out of bona fide commercial or trade transactions bearing two or

•more good signatures and maturing within five years from the date of such

•loan or advance;";

(d)in sub-section (12B), after the words "the Industrial Finance Corporation,",

•the words "the National Bank for Financing Infrastructure and Development or other

•development financial institution," shall be inserted.

SECTION Section 127

Untitled Section

3.In section 42 of the principal Act, in sub-section ( 1), in the Explanation , in

SECTION Section 128

Untitled Section

•clause (c), in sub-clause (ii), after the words "or from the Small Industries Bank", the words

•"or from the National Bank for Financing Infrastructure and Development or from the other

•development financial institution" shall be inserted.

SECTION Section 129

Untitled Section

4.In section 46C of the principal Act, in sub-section (2),—

(a)in clause (c), after the words "or the Small Industries Bank,", the words "or

•the National Bank for Financing Infrastructure and Development or the other

•development financial institution," shall be inserted;

(b)in clause (d), after the words "or the Small Industries Bank,", the words "or

•the National Bank for Financing Infrastructure and Development or the other

•development financial institution," shall be inserted.

•21

•Amendment

•of section 2.

•Amendment

•of section 17.

•Amendment

•of section 42.

•Amendment

•of section

46C.

•2 of 1934.

•THE THIRD SCHEDULE

•(See section 48)

•AMENDMENTS TO THE BANKING REGULATION ACT, 1949

SECTION Section 13

Untitled Section

8.Delegation of powers.

9.Term of office and other terms and conditions of service of Chairperson and other

•directors of Board.

SECTION Section 130

Untitled Section

1.In the Banking Regulation Act, 1949 (hereinafter referred to as the principal Act), in

SECTION Section 131

Untitled Section

•section 5, after clause (ha), the following clauses shall be inserted, namely:—

•'(hb) "National Bank for Financing Infrastructure and Development" means the

•Institution established under section 3 of the National Bank for Financing Infrastructure

•and Development Act, 2021;

•(hc) "other development financial institution" means a development financial

•institution licensed under section 29 of the National Bank for Financing Infrastructure

•and Development Act, 2021;'.

SECTION Section 132

Untitled Section

2.In section 18 of the principal Act, in sub-section (1), in the Explanation, in clause

(a), in sub-clause (ii), after the words "or from the Small Industries Bank", the words "or from

•the National Bank for Financing Infrastructure and Development or from the other development

•financial institution" shall be inserted.

SECTION Section 133

Untitled Section

3.In section 34A of the principal Act, in sub-section (3), after the words "the Small

•Industries Bank", the words "the National Bank for Financing Infrastructure and Development

•or the other development financial institution," shall be inserted.

SECTION Section 134

Untitled Section

4.In section 36AD, in sub-section (3), after the words "the Small Industries Bank", the

•words ", the National Bank for Financing Infrastructure and Development or the other

•development financial institution," shall be inserted.

•22

•Amendment

•of section 5.

•10 of 1949.

•Amendment

•of section 18.

•Amendment

•of section

34A.

•Amendment

•of section

36AD.

•STATEMENT OF OBJECTS AND REASONS

•India needs significant investments in infrastructure. Infrastructure financing requires

•long-term and non-recourse financing, which is inherently risky in nature due to higher

•credit costs, high risk of delay and failure of projects. Traditionally, banks and financial

•institutions in India have been an important source of financing for infrastructure sector.

•While banks rely heavily on short-term liabilities, infrastructure financing essentially involves

•long-term finance. Consequently, exposure to long-term infrastructure financing has been a

•fundamental source of asset-liability mismatch on the balance-sheets of the banks which

•raises systemic concerns. On the other hand, the Indian corporate bond market is not

•sufficiently deep and is inadequately mature to meet India's infrastructure financing

requirements.In view of this, Government's intervention is necessary to facilitate and to

•enable flow of low cost, long-term, patient capital (primarily debt) from India or abroad into

•greenfield infrastructure projects to foster sustainable economic development. Solutions for

•financing would be part of overall policy interventions addressing challenges to infrastructure

development.

2.Therefore, it has been decided to set up a statutory Institution to be called the

•National Bank for Financing Infrastructure and Development as the principal development

•financial institution and development bank for infrastructure financing. Its aim is to address

•market failures that stem from the long-term, low margin and risky nature of infrastructure

financing.The Institution shall be wholly owned by the Central Government to begin with in

•order to foster confidence on its stability and sustainability and to raise resources at

•competitive rates. The Government will provide the Institution with grants and contributions,

•guarantees at concessional rates for foreign borrowings and any other concessions. Dilution

•or sale of stake may be considered once the Institution has achieved stability and scale in its

•business operations but the Government would at all times hold twenty-six per cent. of the

•paid-up voting equity share capital of the Institution.

3.The Institution shall have both developmental and financial objectives. Among other

•things, this would include developing a deep and liquid bond market of international standards

•for long-term infrastructure financing in India including through widening of the issuer and

•investor base. It would also facilitate the development of markets for interest rate derivatives,

•credit derivatives, currency derivatives and such other innovative financial instruments as

•may be necessary for infrastructure financing. The financing objectives would involve

•establishing a credible framework that attracts equity investments from domestic and global

•institutional investors as well as debt investments, including green finance, from investors,

•aligned to their risk appetite and asset-liability profile, in order to cater the financing needs of

•Indian infrastructure sector.

SECTION Section 135

Untitled Section

4.Debt securities, including bonds and debentures, issued by the Institution should

•be considered as eligible for the purposes such as approved investments, securities, etc., as

•per limits and conditions to be prescribed by Indian financial regulators for their regulated

entities.The Institution would also be empowered to lend to, or invest in, infrastructure

•projects located in India, or partly in India and partly outside India, prioritising systemic risk

•mitigation, credit enhancement, subordinate debt, debt maturities suited to project life spans

•and to raise long-term finance for the same.The Institution may also be involved in project

•structuring, monitoring and monetisation of completed projects by itself or through its

•subsidiaries, etc., promoting innovation in financial products and services including by

•issuing long-term bonds with explicit or implicit sovereign guarantee, underwriting and

•dealer services. Overall, the Institution shall provide a supporting, technology enabled

•ecosystem across the life-cycle of infrastructure projects as a provider, enabler and catalyst

•for sustainable infrastructure financing in India with the backing of the Government. The

•Institution shall support the bond market with the aim of fostering complementarity of market

•raised debt with lending for infrastructure projects.

•23

•24

SECTION Section 136

Untitled Section

5.Accordingly, it is proposed to bring a legislation, namely, the National Bank for

•Financing Infrastructure and Development Bill, 2021 which seeks to provide, inter alia, for

•the following:—

(i)to establish a statutory Institution to be called the National Bank for Financing

•Infrastructure and Development to support the development of long-term infrastructure

•financing in India and to carry on the business of financing infrastructure;

•(ii) to enable the Central Government, multilateral institutions, sovereign wealth

•funds, and such other institutions to hold equity in the Institution;

•(iii) to enable the Institution to provide financial assistance to infrastructure

•projects located in India, or partly in India and partly outside India;

•(iv) to enable the Institution to borrow or raise money by way of loans or otherwise,

•both in rupees and foreign currencies;

(v)to provide adequate safeguards for decision making to address risk aversion;

•and

•(vi) to make provision for the establishment of other development financial

•institution, in addition to the Institution established under the proposed legislation.

SECTION Section 137

Untitled Section

6.The notes on clauses explain in detail the various provisions contained in the Bill.

SECTION Section 138

Untitled Section

7.The Bill seeks to achieve the above objectives.

•N

•EW DELHI; NIRMALA SITHARAMAN.

•The 18th March, 2021.

•————

•PRESIDENT'S RECOMMENDATION UNDER ARTICLE 117 OF THE CONSTITUTION

•OF INDIA

•————

•[D.O. No. 18/7/2019-IF-I, dated 12.3.2021 from Smt. Nirmala Sitharaman, Minister of

•Finance and Corporate Affairs to the Secretary General, Lok Sabha]

•The President, having been informed of the subject matter of the proposed National

•Bank for Financing Infrastructure and Development Bill, 2021, recommends the introduction

•of the Bill under article 117(1) and consideration of the Bill under article 117(3) of the

Constitution.

•Notes on clauses

SECTION Section 139

Untitled Section

•Clause 1 of the Bill provides for short title, extent and commencement of the proposed

Bill.

SECTION Section 14

Untitled Section

10.Disqualification and removal of directors from office.

SECTION Section 140

Untitled Section

•Clause 2 of the Bill seeks to define the various expressions used in the Bill.

SECTION Section 141

Untitled Section

•Clause 3 of the Bill provides for the establishment and incorporation of an Institution

•to be called the National Bank for Financing Infrastructure and Development as a development

•financial institution.

SECTION Section 142

Untitled Section

•Clause 4 of the Bill provides for the purposes and objectives of Institution covering

•both developmental and financial objectives.

SECTION Section 143

Untitled Section

•Clause 5 of the Bill provides for the authorised Share Capital of Institution of the

•Institution which shall be one hundred thousand crore rupees divided into ten thousand

•crores of fully paid-up shares of ten rupees each. It further provides that shares of the

•Institution may be held only by the Central Government, multilateral institutions, sovereign

•wealth funds, pension funds, insurers, financial institutions, banks, etc., and the Central

•Government shall hold at least twenty-six per cent. of the shares of the Institution at all times.

SECTION Section 144

Untitled Section

•Clause 6 of the Bill provides for a Board of Directors of the Institution which shall

•comprise of a Chairperson to be appointed by the Central Government, a Managing Director

•and not more than three Deputy Managing Directors to be appointed by the Board, two

•directors to be nominated by the Central Government from amongst its officials, not more

•than three directors to be elected by shareholders and not more than three independent

•directors or one-third of the total number of directors on the Board, whichever is higher, to be

•appointed by the Board.

SECTION Section 145

Untitled Section

•Clause 7 of the Bill provides that the general superintendence, direction and

•management of the affairs and business of the Institution shall vest in the Board of Directors

•of the Institution and the Board shall exercise all powers and do all acts and things which

•may be exercised or be done by the Institution.

SECTION Section 146

Untitled Section

•Clause 8 of the Bill empowers the Board to delegate to any director or committee

•constituted under this Act or to any officer or other employee of the Institution, such of its

•powers and functions under this Act as it may deem necessary.

SECTION Section 147

Untitled Section

•Clause 9 of the Bill provides for the term of office and other terms and conditions of

•service of Chairperson and other directors of the Board.

SECTION Section 148

Untitled Section

•Clause 10 of the Bill provides for disqualification and removal of directors from office.

SECTION Section 149

Untitled Section

•Clause 11 of the Bill provides for the removal of Chairperson and other directors in

•certain cases.

SECTION Section 15

Untitled Section

11.Removal of Chairperson and other directors in certain cases.

SECTION Section 150

Untitled Section

•Clause 12 of the Bill provides for the vacation and resignation of office by directors.

SECTION Section 151

Untitled Section

•Clause 13 of the Bill provides that the Board shall meet at such times and places and

•shall observe such rules of procedure in regard to the transaction of business at its meetings,

•as may be specified by regulations. It further provides that the meeting of the Board shall be

•held at least once in every calendar quarter, and at least four such meetings shall be held

•every year.

SECTION Section 152

Untitled Section

•Clause 14 of the Bill provides that no act or proceeding of the Board or of any of its

•committee shall be questioned on the ground merely of the existence of any vacancy in, or

•defect in the constitution of, the Board or the committee, as the case may be.

•25

•26

SECTION Section 153

Untitled Section

•Clause 15 of the Bill provides for the Board to constitute a Nomination and Remuneration

•Committee, a Risk Management Committee, and an Audit Committee and such other committees

•as it may consider necessary.

SECTION Section 154

Untitled Section

•Clause 16 of the Bill provides that every director shall at the first meeting of the Board

•in which he participates as a director and thereafter at the first meeting of the Board in every

•financial year, or whenever there is any change in the disclosures already made, then at the

•first Board meeting held after such change, disclose his concern or interest in any body

•corporate, which shall include shareholding, in such manner as may be provided by rules

•made by the Central Government. It further provides for penalty for contravention of the

•provisions of the said clause.

SECTION Section 155

Untitled Section

•Clause 17 of the Bill specifies the functions and powers of the Institution which,

•inter alia, includes the development of a deep and liquid market for bonds and derivatives;

•lend, invest in infrastructure projects located in India, or partly in India; extend loans and

•advances for funding infrastructure; take over or refinance existing loans; transfer loans and

•advances granted by it; subscribe to or purchase, underwrite, acquire, hold or sell stocks,

•shares, bonds, debenture stocks, debt securities; borrow or raise money, etc.

SECTION Section 156

Untitled Section

•Clause 18 of the Bill prohibits the Institution from certain business which, inter alia,

•includes any loan or advance on the security of its own bonds or debentures, to any person

•or body of persons of which any of the directors of the Institution is a proprietor, partner,

•director, employee or guarantor, or in which one or more directors of the Institution hold

•substantial interest.

SECTION Section 157

Untitled Section

•Clause 19 of the Bill prohibits the Institution from entering into any contract or

•arrangement with a related party with respect to certain transaction specified therein.

SECTION Section 158

Untitled Section

•Clause 20 of the Bill provides for performance review of the Institution by an external

•agency every five years on certain key performance indicators.

SECTION Section 159

Untitled Section

•Clause 21 of the Bill provides that the Central Government may support the Institution

•through grants or contribution, as and when necessary, in the form of cash or marketable

•Government securities. It further provides that the Central Government shall, by the end of

•the first financial year from the establishment of Institution, grant or contribute an amount of

•five thousand crore rupees to the Institution in the form of cash or marketable Government

securities.

SECTION Section 16

Untitled Section

12.Vacation and resignation of office by directors.

SECTION Section 160

Untitled Section

•Clause 22 of the Bill provides that the Government shall prescribe a concessional rate

•of fees, not exceeding 0.1 per cent. at which Government guarantee may be extended to the

•Institution for borrowings from multilateral institutions, sovereign wealth funds, and such

•other foreign institutions as may be provided by rules made by the Central Government.

SECTION Section 161

Untitled Section

•Clause 23 of the Bill provides that hedging costs in connection with any borrowing of

•foreign currency by the Institution for the purposes of granting loans and advances or its

•repayment, to insulate the Institution from any fluctuations in the rates of exchange, may be

•reimbursed by the Central Government in part or in full.

SECTION Section 162

Untitled Section

•Clause 24 of the Bill provides for the establishment of a reserve fund to which such

•sums may be transferred as the Board may deem fit out of the annual profits which shall not

•be less than twenty per cent. of the annual profits accruing to the Institution.

SECTION Section 163

Untitled Section

•Clause 25 of the Bill provides for the preparation of balance-sheet and accounts. It

•further seeks to provide that the Board shall cause the books and accounts of the Institution

•to be closed and balanced as on the 31 st day of March each year or such other date as the

•Board may determine.

SECTION Section 164

Untitled Section

•Clause 26 of the Bill provides that the accounts of the Institution shall be audited by

•auditors duly qualified to act as auditors under sub-section (1) of section 141 of the Companies

•Act, 2013, who shall be appointed by the Institution out of the panel of auditors approved by

•the Reserve Bank for such term and on such remuneration as the Reserve Bank may fix.

•27

SECTION Section 165

Untitled Section

•Clause 27 of the Bill provides that the Institution shall furnish, from time to time, to the

•Central Government and to the Reserve Bank, such returns as the Central Government or the

•Reserve Bank may require.

SECTION Section 166

Untitled Section

•Clause 28 of the Bill provides that any sums received by a financial institution for

•refinancing from the Institution shall, to the extent of the accommodation granted by the

•Institution and remaining outstanding, be deemed to have been received by the financial

•institution in trust for the Institution and shall accordingly be paid by such financial institution

•to the Institution. It further provides that where any accommodation has been granted by the

•Institution to a financial institution, all securities held, or which may be held, by such financial

•institution on account of any transaction in respect of which such accommodation has been

•granted, shall be held by such financial institution in trust for the Institution.

SECTION Section 167

Untitled Section

•Clause 29 of the Bill provides that any person who intends to set up a development

•financial institution, in addition to the Institution established under this Act, shall make an

•application to the Reserve Bank for licence and the Reserve Bank may in consultation with

•the Central Government, grant licence subject to such criteria, terms and conditions as may

•be specified by the Reserve Bank by regulations.

SECTION Section 168

Untitled Section

•Clause 30 of the Bill provides that the institution may appoint such number of officers

•and other employees as it considers necessary or desirable for the efficient performance of

•its functions and determine the terms and conditions of their appointment of service.

SECTION Section 169

Untitled Section

•Clause 31 of the Bill empowers the Central Government to make rules to carry out the

•provisions of the Bill. Sub-clause (2) of the said clause specifies the matters in respect of

•which such rules may be made by the Central Government.

SECTION Section 17

Untitled Section

13.Meetings of Board.

SECTION Section 170

Untitled Section

•Clause 32 of the Bill empowers the Board, with the previous approval of the Central

•Government and in consultation with the Reserve Bank, to make regulations for the purpose

•of giving effect to the provisions of the Bill. Sub-clause (2) of the said clause specifies the

•matters in respect of which such regulations may be made by the Board.

SECTION Section 171

Untitled Section

•Clause 33 of the Bill provides for the laying of the rules and regulations before each

•House of Parliament.

SECTION Section 172

Untitled Section

•Clause 34 of the Bill provides for the protection of action taken in good faith by the

•Institution or its Chairperson or other directors, employees or officers.

SECTION Section 173

Untitled Section

•Clause 35 of the Bill provides that no investigation agency, including but not limited to

•Police, Central Bureau of Investigation, Serious Fraud Investigation Office, Directorate of

•Enforcement and such other agencies, shall conduct any enquiry or inquiry or investigation

•into any offence alleged to have been committed under any law, in relation to any

•recommendation made or decision taken by the Chairperson or other directors, employees or

•officers of the Institution in discharge of his official functions or duties, without the previous

•approval of the competent authority specified therein.

SECTION Section 174

Untitled Section

•Clause 36 of the Bill provides that where any arrangement entered into by the Institution

•with a borrowing entity while granting loans and advances provides for the appointment or

•nomination by the Institution of one or more directors of such entity, such provision and any

•appointment of directors made in pursuance thereof shall be valid and effective

•notwithstanding anything to the contrary contained in the Companies Act, 2013, or in any

•other law for the time being in force or in the memorandum and articles of association or any

•other instrument relating to the entity, and any provision regarding share qualification, age

•limit, number of directorships, removal from office of directors and such like conditions

•contained in any such law or instrument aforesaid, shall not apply to any director appointed

•by the Institution in pursuance of the arrangement as aforesaid.

SECTION Section 175

Untitled Section

•Clause 37 of the Bill provides that notwithstanding anything to the contrary contained

•in any other law for the time being in force, the validity of any loan or advance granted by the

•Institution in pursuance of the provisions of the Bill shall not be called in question merely on

•28

•the ground of non-compliance with the requirements of such other law as aforesaid or of any

•resolution, contract, memorandum, articles of association or other instrument.

SECTION Section 176

Untitled Section

•Clause 38 of the Bill provides for obligations as to fidelity and secrecy by the Institution.

•It further provides that every director, member of a committee, auditor, officer or other employee

•of the Institution or of the Reserve Bank, whose services are utilised by the Institution under

•the provisions of the Bill, shall, before entering upon his duties, make a declaration of fidelity

•and secrecy in the form set out in the First Schedule to the Bill.

SECTION Section 177

Untitled Section

•Clause 39 of the Bill provides for the Board to make regulations for setting up a

•mechanism for the purpose of determining the penalties specified under sub-clause (5) of

SECTION Section 178

Untitled Section

•clause 16 and sub- clause (5) of clause 19.

SECTION Section 179

Untitled Section

•Clause 40 of the Bill provides that every director shall be indemnified by the Institution

•against all losses and expenses incurred by him in, or in relation to, the discharge of his

•duties, except such as are caused by his own wilful act or default.

SECTION Section 18

Untitled Section

14.Defects in appointment not to invalidate acts, etc.

SECTION Section 180

Untitled Section

•Clause 41 of the Bill provides that the Bankers’ Books Evidence Act, 1891, shall apply

•in relation to the Institution as if it were a bank as defined in section 2 of that Act.

SECTION Section 181

Untitled Section

•Clause 42 of the Bill provides that the provisions of section 34A and section 36AD of

•the Banking Regulation Act, 1949 shall apply to the Institution.

SECTION Section 182

Untitled Section

•Clause 43 of the Bill provides that no provision of law relating to the winding up of

•companies shall apply to the Institution and the Institution shall not be placed in liquidation

•save by order of the Central Government and in such manner as it may direct.

SECTION Section 183

Untitled Section

•Clause 44 of the Bill empowers the Central Government to issue directions to the

•Institution and the Institution shall be bound by such directions.

SECTION Section 184

Untitled Section

•Clause 45 of the Bill provides that the provisions of the Bill shall have effect,

•notwithstanding anything inconsistent therewith contained in any other law for the time

•being in force or any instrument having effect by virtue of any such law.

SECTION Section 185

Untitled Section

•Clause 46 of the Bill empowers the Central Government, by order, published in the

•Official Gazette, to make such provisions, not inconsistent with the provisions of the Bill, as

•may be necessary or expedient for removing the difficulty.

SECTION Section 186

Untitled Section

•Clause 47 of the Bill seeks to amend the Reserve Bank of India Act, 1934 in the manner

•specified in the Second Schedule of the Bill.

•Clause 48 of the Bill seeks to amend the Banking Regulation Act, 1949 in the manner

•specified in the Third Schedule of the Bill.

•FINANCIAL MEMORANDUM

•Sub-clause (1) of clause 3 of the Bill provides for the establishment of an institution to

•be called the National Bank for Financing Infrastructure and Development as a development

•financial institution.

SECTION Section 187

Untitled Section

2.Sub-clause (1) of clause 5 of the Bill provides that the authorised share capital of the

•Institution shall be one hundred thousand crore rupees divided into ten thousand crores of

•fully paid-up shares of ten rupees each. Sub-clause (2) of the said clause provides that the

•issued share capital of the Institution shall, on such date as may be notified by the Central

•Government, stand allotted to the Central Government. The first proviso to sub-clause (3) of

•the said clause provides that the Central Government shall hold at least twenty-six per cent.

•of the shares of the Institution at all times. Sub-clause (4) of the said clause provides that the

•Board may, with the prior approval of the Central Government, reduce its share capital,

•including by way of buy-back of shares.

SECTION Section 188

Untitled Section

3.Sub-clause (3) of clause 17 of the Bill provides that the Central Government may, on

•a request being made to it by the Institution, guarantee the bonds, debentures and loans

•issued by the Institution as to the repayment of principal and the payment of interest at such

•rate, terms and conditions as may be agreed by the Central Government.

SECTION Section 189

Untitled Section

4.Sub-clause (1) of clause 21 of the Bill provides that the Central Government may

•support the Institution through grants or contribution, as and when necessary, in the form of

•cash or marketable Government securities. Sub-clause (2) of the said clause 21 provides that

•the Central Government shall, by the end of the first financial year from the establishment of

•Institution, grant or contribute an amount of five thousand crore rupees to the Institution in

•the form of cash or marketable Government securities.

SECTION Section 19

Untitled Section

15.Committees of Board.

SECTION Section 190

Untitled Section

5.Clause 22 of the Bill provides that the Government shall prescribe a concessional

•rate of fees, not exceeding 0.1 per cent. at which Government guarantee may be extended to

•the Institution for borrowings from multilateral institutions, sovereign wealth funds, and

•such other foreign institutions as may be specified by rules made by the Central Government.

SECTION Section 191

Untitled Section

6.Clause 23 of the Bill provides that the hedging costs in connection with any borrowing

•of foreign currency by the Institution for the purposes of granting loans and advances or its

•repayment, to insulate the Institution from any fluctuations in the rates of exchange, may be

•reimbursed by the Central Government in part or in full.

SECTION Section 192

Untitled Section

7.At present, it is not possible to estimate such recurring and non-recurring

•expenditures for the purposes specified in paragraphs 3, 5 and 6 above.

SECTION Section 193

Untitled Section

8.The Bill, if enacted and brought into operation, would not involve any other

•expenditure of a recurring or non-recurring nature other than that mentioned in the preceding

paragraph.

•29

•MEMORANDUM REGARDING DELEGATED LEGISLATION

SECTION Section 194

Untitled Section

•Clause 31 of the Bill empowers the Central Government, to make rules for the purpose

•of giving effect to the provisions of the proposed legislation. Sub-clause (2) of the said

SECTION Section 195

Untitled Section

•clause specifies the matters in respect of which such rules may be made. These matters

•include (a) institutions that may hold shares of the Institution under sub-clause (3) of clause

•5; (b) the manner of election of directors by shareholders under sub-clause (1) (e) of clause

•6; (c) the terms and conditions of induction of independent directors to the Board under

•sub-clause (5) of clause 6; (d) the fees and reimbursements in respect of independent directors

•under sub-clause (3), and the term of office and other terms and conditions of service of,

•the Chairperson, Managing Director, Deputy Managing Director and other directors of Board

•under sub-clause (5), of clause 9; (e) manner of disclosure of interest by members of Board

•and of committees under sub-clause (1) of clause 16; (f) the threshold for determination of

•beneficial interest by directors of the Institution or any relative of such director under the

•Explanation to sub-clause (3) of clause 18; (g) conditions subject to which the Institution

•may enter into a contract or an arrangement under sub-clause (1) of clause 19; (h) the

•parameters on the basis of which the external agency shall review the performance of the

•Institution under sub-clause (2) of clause 20; (i) the rate of fees for Government under clause

•22; (j) the form and manner in which the balance-sheet and accounts of the Institution shall

•be prepared under sub-clause (1) of clause 25; (k) any other matter which is required to be,

•or may be, provided by rules by the Central Government under the provisions of the Bill.

SECTION Section 196

Untitled Section

2.Clause 32 of the Bill empowers the Board, with the previous approval of the Central

•Government and in consultation with the Reserve Bank, to make regulations for giving

•effect to the provisions of the Bill. These matters include (a) the salaries and allowances

•payable to the Managing Director and Deputy Managing Directors under sub-clause (4) of

SECTION Section 197

Untitled Section

•clause 9; (b) the times and places and rules of procedure in regard to the transaction of

•business of the Board under sub-clause (1) of clause 13; (c) the times and places and rules

•of procedure in regard to the transaction of business of the committees and their functions

•under sub-clause (5) of clause 15; (d) amount for transactions under the proviso to sub-

SECTION Section 198

Untitled Section

•clause (1) of clause 19; (e) the terms and other conditions of service of the officers and

•employees of the Institution under sub-clause (2) and the terms and conditions of deputation

•under sub-clause (4), of clause 30; (f) the mechanism under sub-clause (1) of clause 39 for

•the purpose of determining the penalties specified under sub-clause (5) of clause 16 and sub-

SECTION Section 199

Untitled Section

•clause (5) of clause 19; (g) any other matter which is to be, or may be, specified by regulations.

SECTION Section 2

Untitled Section

•CHAPTER I

•PRELIMINARY

SECTION Section 20

Untitled Section

16.Disclosure of interest by members of Board or of committees.

SECTION Section 200

Untitled Section

3.Sub-clause (2) of clause 29 of the Bill empowers the Reserve Bank of India, in

•consultation with the Central Government, to make regulations to provide for the criteria,

•terms and conditions for the grant of licence under the said clause.

SECTION Section 201

Untitled Section

4.The matters in respect of which rules and regulations may be made are matters of

•procedure and administrative detail and it is not practicable to provide for them in the Bill

itself.The delegation of legislative power is, therefore, of a normal character.

•30

•ANNEXURE

•EXTRACTS FROM THE RESERVE BANK OF INDIA ACT, 1934

•(2 OF 1934)

•* * * * *

SECTION Section 202

Untitled Section

17.The Bank shall be authorised to carry on and transact the several kinds of business

•hereinafter specified, namely:—

•* * * * *

•(4G) the making of loans and advances to, and the purchasing of bonds and

•debentures of, the Exim Bank or the Reconstruction Bank or the Small Industries Bank

•out of the National Industrial Credit (Long Term Operations) Fund established under

SECTION Section 203

Untitled Section

•section 46C;

•* * * * *

•(4-I) the making to scheduled banks, the Exim Bank the Reconstruction Bank or

•the Small Industries Bank the Industrial Finance Corporation and any other financial

•institution as may, on the recommendation of the Bank, be approved in this behalf by

•the Central Government of loans and advances repayable on demand or otherwise and

•against such security and on such other terms and conditions as may be approved in

•this behalf by the Central Board for the purpose of enabling such banks, or financial

•institution, as the case may be, to purchase foreign exchange from the Bank for the

•purpose of financing the import of capital goods or for such other purposes as may be

•approved by the Central Government;

•* * * * *

•(12B) the making of loans and advances in foreign currencies to scheduled

•banks, the Exim Bank, or the Reconstruction Bank or the Small Industries Bank the

•Industrial Finance Corporation, any State Financial Corporation and any other financial

•institution as may, on the recommendation of the Bank, be approved by the Central

•Government and on such terms and conditions as may be specified by the Central

•Board in this behalf, against promissory notes of such bank or financial institution, as

•the case may be:

•Provided that the borrowing bank or financial institution, as the case may be,

•furnishes a declaration in writing to the effect that—

(a)it has made loans and advances in foreign currencies for financing

•international trade or for the import of capital goods or for such other purposes

•as may be approved by the Central Government; and

(b)that the amount of loans or advances so made and outstanding at any

•time will not be less than the outstanding amount of the loans or advances

•obtained by it from the Bank;

•* * * * *

SECTION Section 204

Untitled Section

42.(1) Every bank included in Second Schedule shall maintain with the Bank an

•average daily balance the amount of which shall not be less than such per cent. of the total

•of the demand and time liabilities in India of such bank as shown in the return referred to in

•sub-section (2), as the Bank may from time to time, having regard to the needs of securing the

•monetary stability in the country, notify in the Gazette of India.

Explanation.— For the purposes of this section,—

•* * * * *

•31

•Business which

•the Bank may

transact.

•Cash reserves

•of scheduled

•banks to be

•kept with the

Bank.

•32

(c)"liabilities" shall not include—

•* * * * *

•(ii) the amount of any loan taken from the Bank or from the Exim Bank or

•from the Reconstruction Bank or from the National Housing Bank or from the

•National Bank or from the Small Industries Bank;

•* * * * *

46C.(1) * * * * *

(2)The amount in the said fund shall be applied by the Bank only to the following

•objects, namely:—

•* * * * *

(c)the making to the Exim Bank or the Reconstruction Bank or the Small Industries

•Bank, as the case may be of loans and advances for the purposes of any business of

•the Exim Bank or the Reconstruction Bank or the Small Industries Bank, as the case

•may be;

(d)the purchasing of bonds and debentures issued by the Exim Bank or the

•Reconstruction Bank or the Small Industries Bank, as the case may be.

•* * * * *

•————

•E

•XTRACTS FROM THE BANKING REGULATION ACT, 1949

•(10 OF 1949)

•* * * * *

SECTION Section 205

Untitled Section

18.(1) Every banking company, not being a scheduled bank, shall maintain in India on

•a daily basis by way of cash reserve with itself or by way of balance in a current account with

•the Reserve Bank, or by way of net balance in current accounts or in one or more of the

•aforesaid ways, a sum equivalent to such per cent. of the total of its demand and time

•liabilities in India as on the last Friday of the second preceding fortnight as the Reserve Bank

•may specify, by notification in the Official Gazette, from time to time, having regard to the

•needs of securing the monetary stability in the country and shall submit to the Reserve Bank

•before the twentieth day of every month a return showing the amount so held on alternate

•Fridays during a month with particulars of its demand and time liabilities in India on such

•Fridays or if any such Friday is a public holiday under the Negotiable Instruments Act, 1881,

•at the close of business on the preceding working day.

Explanation.—In this section, and in section 24,—

(a)"liabilities in India" shall not include—

•* * * * *

•(ii) any advance taken from the Reserve Bank or from the Exim Bank or

•from the Reconstruction Bank or from the National Housing Bank or from the

•National Bank, or from the small Industries Bank, by the banking company;

•* * * * *

34A.(1)* * * * *

(3)For the purposes of this section "banking company" includes the Reserve Bank,

•the Exim Bank, the Reconstruction Bank, the National Housing Bank, the National Bank, the

•Small Industries Bank, the State Bank of India, a corresponding new bank, a regional rural

•bank and a subsidiary bank.

•* * * * *

•National

•Industrial

•Credit (Long

•Term

•Operations)

Fund.

•Cash reserve.

•Protection of

•documents of

•confidential

nature.

•26 of 1881.

•33

•PART IIB

•PROHIBITION OF CERTAIN ACTIVITIES IN RELATION TO BANKING COMPANIES

•36AD .( 1) * * * * *

(3)For the purposes of this section "banking company" includes the Reserve Bank,

•the Exim Bank, the Reconstruction Bank, the National Housing Bank, the National Bank, the

•Small Industries Bank, the State Bank of India, a corresponding new bank, a regional rural

•bank and a subsidiary bank.

•* * * * *

•Punishments

•for certain

•activities in

•relation to

•banking

companies.

•MGIPMRND—1688LS—18-03-2021.

•LOK SABHA

•————

•A

•BILL

•to establish the National Bank for Financing Infrastructure and Development to support the

•development of long term non-recourse infrastructure financing in India including

•development of the bonds and derivatives markets necessary for infrastructure financing

•and to carry on the business of financing infrastructure and for matters connected

•therewith or incidental thereto.

•————

•(Shrimati Nirmala Sitharaman, Minister of Finance and Corporate Affairs )

SECTION Section 21

Untitled Section

•CHAPTER IV

•A

•CTIVITIES OF INSTITUTION

SECTION Section 22

Untitled Section

17.Functions and powers of Institution.

SECTION Section 23

Untitled Section

18.Prohibited business.

SECTION Section 24

Untitled Section

19.Related party transactions.

SECTION Section 25

Untitled Section

20.Performance review of Institution.

SECTION Section 26

Untitled Section

•CHAPTER V

•G

•OVERNMENT GRANTS, GUARANTEES AND OTHER CONCESSIONS

SECTION Section 27

Untitled Section

21.Grants and contribution.

SECTION Section 28

Untitled Section

22.Concessional rate of Government guarantee.

SECTION Section 29

Untitled Section

23.Hedging costs.

SECTION Section 30

Untitled Section

•CHAPTER VI

•A

•CCOUNTS, AUDIT AND REPORT

SECTION Section 31

Untitled Section

24.Disposal of profits accruing to Institution, to reserve fund.

SECTION Section 32

Untitled Section

25.Preparation of balance-sheet and accounts.

•A

•S INTRODUCED IN LOK SABHA

•Bill No. 76 of 2021

SECTION Section 34

Untitled Section

27.Returns and report.

SECTION Section 35

Untitled Section

•CHAPTER VII

•MISCELLANEOUS

SECTION Section 36

Untitled Section

28.Receivables to be held in trust.

SECTION Section 37

Untitled Section

29.Setting up of other development financial institution.

SECTION Section 38

Untitled Section

30.Officers and employees.

SECTION Section 39

Untitled Section

31.Power of Central Government to make rules.

SECTION Section 4

Untitled Section

1.Short title, extent and commencement.

SECTION Section 40

Untitled Section

32.Power of Board to make regulations.

SECTION Section 41

Untitled Section

33.Rules and regulations to be laid before Parliament.

SECTION Section 42

Untitled Section

34.Protection of action taken in good faith.

SECTION Section 43

Untitled Section

35.Sanction for enquiry, inquiry, investigation and prosecution.

SECTION Section 44

Untitled Section

36.Appointment of directors by Institution to prevail.

SECTION Section 45

Untitled Section

37.Validity of loan or advance not to be questioned.

SECTION Section 46

Untitled Section

38.Obligations as to fidelity and secrecy.

SECTION Section 47

Untitled Section

39.Adjudication.

SECTION Section 48

Untitled Section

40.Indemnity of directors.

SECTION Section 49

Untitled Section

41.Bankers’ Books of Evidence Act, 1891 to apply in relation to the Institution.

SECTION Section 5

Untitled Section

2.Definitions.

SECTION Section 50

Untitled Section

42.Sections 34A and 36AD of the Banking Regulation Act, 1949 to apply to Institution.

SECTION Section 51

Untitled Section

43.Liquidation of Institution.

SECTION Section 52

Untitled Section

44.Power of Central Government to issue directions.

SECTION Section 53

Untitled Section

45.Overriding effect of this Act.

SECTION Section 54

Untitled Section

46.Power to remove difficulties.

SECTION Section 55

Untitled Section

47.Amendment of Act 2 of 1934.

SECTION Section 56

Untitled Section

48.Amendment of Act 10 of 1949.

•THE FIRST SCHEDULE

•THE SECOND SCHEDULE

•THE THIRD SCHEDULE

•(ii)

•C

•LAUSES

•1

•THE NATIONAL BANK FOR FINANCING INFRASTRUCTURE AND

•DEVELOPMENT BILL, 2021

•A

•BILL

•to establish the National Bank for Financing Infrastructure and Development to support

•the development of long term non-recourse infrastructure financing in India including

•development of the bonds and derivatives markets necessary for infrastructure

•financing and to carry on the business of financing infrastructure and for matters

•connected therewith or incidental thereto.

•B

•E it enacted by Parliament in the Seventy-second Year of the Republic of India as

•follows:—

SECTION Section 57

Untitled Section

•CHAPTER I

•PRELIMINARY

SECTION Section 58

Untitled Section

1.(1) This Act may be called the National Bank for Financing Infrastructure and

•Development Act, 2021.

(2)It extends to the whole of India.

•Short title,

•extent and

commencement.

•Bill No. 76 of 2021

•AS INTRODUCED IN LOK SABHA

•5

•2

(3)It shall come into force on such date as the Central Government may, by notification

•in the Official Gazette, appoint and different dates may be appointed for different provisions

•of this Act and any reference in any provision to the commencement of this Act shall be

•construed as a reference to the coming into force of that provision.

SECTION Section 59

Untitled Section

2.(1) In this Act, unless the context otherwise requires,—

(a)"Audit Committee" means the Audit Committee of the Board constituted

•under sub-section (1) of section 15;

(b)"Board" means the Board of Directors constituted under section 6;

(c)"Bureau" means a body which the Central Government may notify, for the

•purpose of recommending candidates for appointment of Managing Director and

•Deputy Managing Director under sub-section ( 1) of section 6 and for removal of a

•director under clause (ii) of sub-section (1) of section 11;

(d)"Chairperson" means the Chairperson of the Board appointed under clause

(a)of sub-section (1) of section 6;

(e)"committee" means a committee of the Board constituted under section 15;

(f)"Deputy Managing Director" means the Deputy Managing Director appointed

•under clause (c) of sub-section (1) of section 6;

(g)"director" includes a Chairperson, Managing Director, Deputy Managing

•Directors and other directors of the Board appointed or nominated under section 6;

(h)"Executive Committee" means the Executive Committee of the Board

•constituted under sub-section (2) of section 15;

(i)"financial institution" shall have the meaning assigned to it under clause (m)

•of sub-section (1) of section 2 of the Securitisation and Reconstruction of Financial

•Assets and Enforcement of Security Interest Act, 2002;

(j)"independent director" means the independent director of the Board appointed

•under clause (f) of sub-section (1) of section 6;

(k)"infrastructure" means the sectors covered by the list of infrastructure sector

•notified by the Central Government from time to time;

(l)"Institution" means the National Bank for Financing Infrastructure and

•Development established under section 3;

(m)"insurer" shall have the meaning assigned to it under sub-section (9) of

SECTION Section 6

Untitled Section

•CHAPTER II

•E

•STABLISHMENT AND INCORPORA TION OF INSTITUTION

SECTION Section 60

Untitled Section

•section 2 of the Insurance Act, 1938;

(n)"Managing Director" means the director appointed under clause ( b) of

•sub-section (1) of section 6;

(o)"Nomination and Remuneration Committee" means the Nomination and

•Remuneration Committee of the Board constituted under sub-section (1) of section 15;

(p)"notification" means a notification published in the Official Gazette and the

•expression “notify” shall be construed accordingly;

(q)"pension fund" shall have the meaning as assigned to it under clause ( l) of

•sub-section (1) of section 2 of the Pension Fund Regulatory and Development Authority

•Act, 2013;

(r)"prescribed" means prescribed by rules made under this Act by the Central

•Government;

(s)"regulations" means regulations made by the Board under this Act and includes

•the regulations made by the Reserve Bank under section 29;

Definitions.

•54 of 2002.

•4 of 1938.

•23 of 2013.

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(t)"Reserve Bank" means the Reserve Bank of India established under the

•Reserve Bank of India Act, 1934;

(u)“Risk Management Committee” means the Risk Management Committee of

•the Board constituted under sub-section (1) of section 15;

(v)"Schedule" means a Schedule appended to this Act.

(2)Words and expressions used but not defined in this Act but defined in the Indian

•Contract Act, 1872, the Indian Partnership Act, 1932, the Securities Contracts (Regulation) Act,

•1956, the Securities and Exchange Board of India Act, 1992, the Recovery of Debts Due to

•Banks and Financial Institutions Act, 1993, the Limited Liability Partnership Act, 2008 and the

•Companies Act, 2013, shall have the meanings respectively assigned to them in those Acts.

SECTION Section 61

Untitled Section

•CHAPTER II

•E

•STABLISHMENT AND INCORPORATION OF INSTITUTION

SECTION Section 62

Untitled Section

3.(1) There shall be established, for the purposes of this Act, an Institution to be

•called the National Bank for Financing Infrastructure and Development as a development

•financial institution.

(2)The Institution shall be a body corporate by the name aforesaid, having perpetual

•succession and a common seal, with power, subject to the provisions of this Act, to acquire,

•hold and dispose of property, both movable and immovable, and to contract, and shall, by

•the said name, sue or be sued.

(3)The head office of the Institution shall be in Mumbai.

(4)The Institution may establish offices, branches or agencies at any place within or

•outside India.

SECTION Section 63

Untitled Section

4.(1) The Institution shall have developmental and financial objectives as set out in

•sub-sections (2) and ( 3).

(2)The developmental objective of the Institution shall be to coordinate with the

•Central and State Governments, regulators, financial institutions, institutional investors and

•such other relevant stakeholders, in India or outside India, to facilitate building and improving

•the relevant institutions to support the development of long-term non-recourse infrastructure

•financing in India including the domestic bonds and derivatives markets.

(3)The financial objective of the Institution shall be to lend or invest, directly or

•indirectly, and seek to attract investment from private sector investors and institutional

•investors, in infrastructure projects located in India, or partly in India and partly outside

•India, with a view to foster sustainable economic development in India.

SECTION Section 64

Untitled Section

5.(1) The authorised share capital of the Institution shall be one hundred thousand

•crore rupees divided into ten thousand crores of fully paid-up shares of ten rupees each:

•Provided that the Board may increase or reduce the nominal or face value of the shares,

•and divide the authorised capital into such denomination as it may decide:

•Provided further that the Board may, in consultation with the Central Government,

•increase or reduce the authorised capital subject to the shares in all cases being fully paid-up

shares.

(2)The issued share capital of the Institution shall, on such date as may be notified by

•the Central Government, stand allotted to the Central Government.

(3)Shares of the Institution may be held by the Central Government, multilateral

•institutions, sovereign wealth funds, pension funds, insurers, financial institutions, banks,

•2 of 1934.

•9 of 1872.

•9 of 1932.

•42 of 1956.

•15 of 1992.

•51 of 1993.

•6 of 2009.

•18 of 2013.

•Establishment

•and

•incorporation

•of Institution.

•Purposes and

•objectives of

Institution.

•Authorised

•share capital.

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•and any such institution as may be prescribed:—

•Provided that the Central Government shall hold at least twenty-six per cent. of the

•shares of the Institution at all times.

(4)The Board may, with the prior approval of the Central Government, reduce its share

•capital, including by way of buy-back of shares.

SECTION Section 65

Untitled Section

•CHAPTER III

•BOARD OF DIRECTORS AND MANAGEMENT

SECTION Section 66

Untitled Section

6.(1) The Board of Directors of the Institution shall consist of the following, namely:—

(a)a Chairperson, to be appointed by the Central Government in consultation

•with the Reserve Bank;

(b)a Managing Director, to be appointed by the Board, on the recommendations

•of the Bureau and subject to such procedure and clearances from such agencies, as

•may be determined by the Central Government;

(c)not more than three Deputy Managing Directors, each of whom shall be

•appointed by the Board, on the recommendations of the Bureau and subject to such

•procedure and clearances from such agencies, as may be determined by the Central

•Government;

(d)two directors, to be nominated by the Central Government, who shall be the

•officials of the Central Government;

(e)such number of directors not exceeding three, elected by shareholders in

•such manner as may be prescribed, such that a shareholder, other than the Central

•Government, holding ten per cent. or more of the total issued equity share capital may

•nominate one director;

(f)such number of independent directors not exceeding three or one-third of the

•total number of directors on the Board, whichever is higher, to be appointed by the

•Board on the recommendation of the Nomination and Remuneration Committee:

•Provided that if the percentage of holding of issued equity share capital with the

•shareholders does not permit election of three directors or until the assumption of

•charge by the directors elected by the shareholders, the Board may at any time co-opt

•such number of independent directors, not exceeding three, to be appointed by the

•Board on the recommendation of the Nomination and Remuneration Committee, who

•shall hold office until the assumption of charge by the directors elected by the

•shareholders and an equal number of such co-opted independent directors shall retire

•in the order of co-option:

•Provided further that at least one of the directors specified in clause ( e) or in

SECTION Section 67

Untitled Section

•clause (f) shall be a woman.

(2)The Managing Director and Deputy Managing Directors shall be whole-time

•directors of the Board.

(3)No person who is a salaried officer or other employee of the Institution shall be

•appointed as a director of the Board except to the post of a Managing Director or a Deputy

•Managing Director.

(4)The Chairperson shall preside over the meetings of the Board.

(5)The terms and conditions of induction of independent directors to the Board under

SECTION Section 68

Untitled Section

•clause (f) of sub-section (1) shall be such as may be prescribed.

(6)The directors appointed under clauses (d) and (f) of sub-section (1) shall be deemed

•to be independent directors under the Companies Act, 2013, for the purpose of immunities

•available to independent directors.

•Board of

Directors.

•18 of 2013.

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SECTION Section 69

Untitled Section

7.( 1) The general superintendence, direction and management of the affairs and

•business of the Institution shall vest in the Board which shall exercise all powers and do all

•acts and things which may be exercised or be done by the Institution.

(2)Subject to the provisions of this Act, the Board in discharging its functions shall

•act on business principles.

SECTION Section 7

Untitled Section

3.Establishment and incorporation of Institution.

SECTION Section 70

Untitled Section

8.The Board may, by general or special order, delegate to any director or committee

•constituted under this Act or to any officer or other employee of the Institution, subject to

•such conditions and limitations, if any, as may be specified in the order, such of its powers

•and functions under this Act as it may deem necessary.

SECTION Section 71

Untitled Section

9.(1) The Chairperson, Managing Director, Deputy Managing Directors and other

•directors of the Board other than the directors nominated by the Central Government under

SECTION Section 72

Untitled Section

•clause (d) of sub-section (1) of section 6, shall hold office for such term, not exceeding five

•years, and shall be eligible for re-appointment subject to an overall term not exceeding ten

•years:

•Provided that the Managing Director and Deputy Managing Directors shall not hold

•office as such after they have attained the age of sixty-five years and sixty-two years,

respectively.

(2)Notwithstanding anything contained in sub-section ( 1), the Chairperson and

•directors nominated or appointed under sub-section (1) of section 6 shall hold office during

•the pleasure of the authority nominating or appointing them.

(3)The Chairperson and directors nominated by the Central Government or shareholders

•and independent directors shall receive such fees and reimbursements as may be prescribed:

•Provided that any fees and reimbursements payable under this sub-section shall not

•be linked with the profits of the Institution.

(4)The salaries and allowances payable to the Managing Director and Deputy

•Managing Directors shall be specified by regulations on the recommendations of the

•Nomination and Remuneration Committee guided by market standards.

(5)The term of office and other terms and conditions of service of, the Chairperson,

•Managing Director, Deputy Managing Directors and other directors of Board other than the

•directors nominated by the Central Government under clause ( d) of sub-section ( 1) of

SECTION Section 73

Untitled Section

•section 6, shall be such as may be prescribed.

(6)Notwithstanding anything contained in this Act, no fees shall be payable to any

•director who is an officer of the Central Government.

SECTION Section 74

Untitled Section

10.(1) The Central Government may remove from office any director who—

(a)is, or at any time has been, adjudged as insolvent; or

(b)has become physically or mentally incapable of acting as a director; or

(c)has been convicted of an offence which, in the opinion of the Central

•Government, involves moral turpitude; or

(d)has acquired such financial or other interest as is likely to affect prejudicially

•his functions as a director; or

(e)has, in the opinion of the Central Government, so abused his position as to

•render his continuance in office detrimental to the public interest; or

(f)has, for any reason, been removed or dismissed from the service of—

(i)the Government; or

•(ii) any bank including the Reserve Bank or the State Bank of India; or

Management.

•Delegation of

powers.

•Term of office

•and other

•terms and

•conditions of

•service of

•Chairperson

•and other

•directors of

Board.

•Disqualification

•and removal

•of directors

•from office.

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•(iii) any public financial institution or State financial corporation, or

•(iv) any other corporation owned or controlled by the Government.

(2)No such director shall be removed under clause (d) or clause (e) of sub-section (1)

•unless he has been given a reasonable opportunity of being heard in the matter.

(3)Any director who is elected or nominated as a Member of Parliament or of any State

•legislature, shall cease to be a director from the date of such election or nomination, as the

•case may be.

(4)The disqualifications or removal under this section shall not take effect—

(a)for thirty days from the date of the adjudication, sentence or order; or

(b)where any appeal or petition is preferred within thirty days against the

•adjudication, sentence or conviction resulting in the sentence or order, until the expiry

•of seven days from the date on which such appeal or petition is disposed of.

SECTION Section 75

Untitled Section

11.(1) Notwithstanding anything contained in section 10,—

(i)the Central Government may, after consulting the Reserve Bank, remove from

•office the Chairperson and appoint in his place another person to fill the vacancy;

•(ii) the Board may, after consulting the Bureau, remove from office any director

•appointed under clause (b) or clause (c) or clause (f) of sub-section (1) of section 6 and

•appoint in his place another person to fill the vacancy;

•(iii) the shareholders, other than the Central Government, may, by a resolution

•passed by majority, of the votes of such shareholders holding in the aggregate not

•less than one-half of the share capital held by all such shareholders, remove any

•director elected under clause (e) of sub-section (1) of section 6 and elect in his place

•another person to fill the vacancy:

•Provided that no person shall be removed from office under this sub-section

•unless such person has been given an opportunity of showing cause against such

removal.

(2)Notwithstanding anything contained in sub-section ( 1), the Central Government

•shall, in consultation with the Reserve Bank, have the right to terminate the term of office of

•the Chairperson, Managing Director, Deputy Managing Directors or directors, as the case

•may be, at any time before the expiry of the term prescribed under sub-section ( 5) of

SECTION Section 76

Untitled Section

•section 9, by giving notice of not less than three months in writing or three months' salary

•and allowances in lieu of such notice.

SECTION Section 77

Untitled Section

12.(1) If a director—

(a)becomes subject to any of the disqualifications mentioned in section 10 or is

•removed under section 11; or

(b)is absent without leave of the Board for three or more consecutive meetings

•thereof,

•his seat shall thereupon become vacant.

(2)Any director may resign his office by giving notice thereof in writing to the Board

•and on such resignation being accepted by the Board, or, if such resignation is not accepted

•sooner, on the expiry of three months from the receipt thereof by Board, such director shall

•be deemed to have vacated his office.

SECTION Section 78

Untitled Section

13.(1) The Board shall meet at such times and places and shall observe such rules of

•procedure in regard to the transaction of business at its meetings, as may be specified by the

regulations.

•Removal of

•Chairperson

•and other

•directors in

•certain cases.

•Vacation and

•resignation of

•office by

directors.

•Meetings of

Board.

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(2)A meeting of the Board shall be held at least once in every calendar quarter and at

•least four such meetings shall be held every year.

(3)The Chairperson of the Board, or, if for any reason he is unable to attend any

•meeting, the Managing Director, or, in the event of both the Chairperson and the Managing

•Director being unable to attend a meeting, any other director nominated by the Chairperson

•in this behalf and in the absence of such nomination, any director elected by the directors

•present from among themselves at the meeting, shall preside at the meeting of the Board.

(4)All questions which come up before any meeting of the Board shall be decided by

•a majority of votes of the directors present and voting, and in the event of an equality of

•votes, the Chairperson, or, in his absence, the person presiding, shall have a second or

•casting vote.

(5)Save as provided in sub-section (4), every director shall have one vote.

SECTION Section 79

Untitled Section

14.(1) No act or proceeding of the Board or of any of its committee shall be questioned

•on the ground merely of the existence of any vacancy in, or defect in the constitution of, the

•Board or the committee, as the case may be.

(2)No act done by any person acting in good faith as a director of the Board or as a

•member of its committee shall become invalid merely on the ground that he was disqualified

•to be a director or that there was any other defect in his appointment.

SECTION Section 8

Untitled Section

4.Purpose and objectives of Institution.

SECTION Section 80

Untitled Section

15.(1) The Board shall constitute a Nomination and Remuneration Committee, a Risk

•Management Committee and an Audit Committee, each consisting of a minimum of three

•directors with independent directors forming a majority.

(2)The Board shall constitute an Executive Committee consisting of such number of

•directors as it may consider necessary.

(3)The Chairperson of the Institution shall not be a member of the Executive Committee

•and after the first year not be Chairperson of Audit Committee or the Nomination and

•Remuneration Committee.

(4)The Board may constitute such other committees as it may deem fit.

(5)The Executive Committee or any other committees constituted under this section

•shall meet at such times and places, observe such rules of procedure in regard to transaction

•of business at its meetings and shall perform such functions, as may be specified by regulations.

SECTION Section 81

Untitled Section

16.(1) Every director shall at the first meeting of the Board in which he participates as

•a director and thereafter at the first meeting of the Board in every financial year, or whenever

•there is any change in the disclosures already made, then at the first Board meeting held after

•such change, disclose his concern or interest in any body corporate, which shall include

•shareholding, in such manner as may be prescribed.

(2)Every director who is in any way, whether directly or indirectly, concerned or

•interested in a contract or arrangement or proposed contract or arrangement entered into or

•to be entered into by the Institution—

(a)with a body corporate in which such director or such director in association

•with any other director, holds more than two per cent. shareholding of that body

•corporate, or is a promoter, manager, chief executive officer or trustee of that body

•corporate; or

(b)with a firm or other entity in which such director is a partner, owner or

•member, as the case may be,

•shall not participate in any meeting of the Board or of its committee in which such contract or

•arrangement is deliberated upon, or in any other deliberations or discussions regarding such

•contract or arrangement, and shall, in the case of such deliberations in a meeting of the Board

•or its committee, disclose the nature of his concern or interest to the Board or the committee,

•as the case may be:—

•Defects in

•appointment

•not to

•invalidate

•acts, etc.

•Committees

•of Board.

•Disclosure of

•interest by

•members of

•Board or of

committees.

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•Provided that where any director who is not so concerned or interested at the time of

•entering into such contract or arrangement, shall, if he becomes concerned or interested after

•the contract or arrangement is entered into, disclose his concern or interest forthwith when

•he becomes concerned or interested, or at the first meeting of the Board held after he becomes

•so concerned or interested.

(3)A contract or arrangement entered into by the Institution without disclosure under

•sub-section (2) or with participation by a director who is concerned or interested in any way,

•whether directly or indirectly, in such contract or arrangement, shall be voidable at the option

•of the Institution.

(4)Such employees as the Board may specify as constituting the senior management

•of the Institution shall make disclosures to the Board relating to all material, financial and

•commercial transactions, in which they have personal interest that may have a potential

•conflict with the interest of the Institution, and the Board shall formulate a policy on such

•transactions, including any materiality threshold therefor, and shall review such policy at

•least once every three years.

Explanation.—For the purposes of this sub-section, conflict of interest relates to

•dealing in the shares of the Institution or any of its subsidiaries or associate companies,

•commercial dealings with bodies in which the senior management individual or his relatives

•have shareholding, etc.

(5)If an individual who is a director contravenes the provisions of sub-section (1) or

•sub-section (2), or an employee referred to in sub-section (4) contravenes such provisions,

•such an individual or employee shall be liable to pay penalty of a sum of up to one lakh

rupees.

(6)Without prejudice to anything contained in sub-section (5), it shall be open to the

•Institution to proceed against a director or any other employee who had entered into such

•contract or arrangement in contravention of the provisions of this section for recovery of

•any loss sustained by it as a result of such contract or arrangement.

•Explanation .—For the purposes of this section and section 19, the expression

•"body corporate" shall include a company, a body corporate as defined under clause (11) of

SECTION Section 82

Untitled Section

•section 2 of the Companies Act, 2013, a firm, a financial institution or a scheduled bank or a

•public sector enterprise established or constituted by or under any Central Act or State Act,

•and any other incorporated association of persons or body of individuals.

SECTION Section 83

Untitled Section

•CHAPTER IV

•A

•CTIVITIES OF INSTITUTION

SECTION Section 84

Untitled Section

17.(1) The Institution shall perform the following functions and exercise the following

•powers, namely:—

(i)form subsidiaries or joint ventures or branches, in India or outside India, for

•carrying out its functions; and enter into any arrangement with such subsidiary

•company or joint venture or branch including for financing any such subsidiary company

•or joint venture or branch or guaranteeing any of their liabilities or make any other

•arrangement which may seem desirable to the Board;

•(ii) co-ordinate its operations and the operations of various institutions engaged

•in the field of infrastructure finance and maintain expert staff to study problems relating

•to infrastructure finance and be available for consultation to the Central Government,

•the Reserve Bank and the other institutions engaged in the field of infrastructure

•finance;

•(iii) set up trusts under the Indian Trusts Act, 1882 for establishment of funds

•for such nature as would assist in financing of infrastructure projects located in India,

•or partly in India and partly outside India, including real estate investment trusts and

•infrastructure investment trusts;

•Functions and

•powers of

Institution.

•2 of 1882.

•18 of 2013.

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•(iv) support the development of a deep and liquid market for bonds, loans and

•derivatives for infrastructure financing including facilitating electronic and negotiated

•markets infrastructure, investor protection, adjudication infrastructure, etc.;

(v)lend and invest in infrastructure projects located in India, or partly in India

•and partly outside India, including by underwriting credit, securitisation of its

•receivables, including by way of any pass through certificate or direct assignment,

•transfer or novation, or by means of innovative financial tools including transactions

•secured by receivables from project;

•(vi) extend loans and advances to any company or statutory corporation or trust

•or any financial institution funding infrastructure, for the purposes of providing

•financial assistance for infrastructure projects located in India, or partly in India and

•partly outside India;

•(vii) take over or refinance existing loans extended by a lender for infrastructure

•projects located in India, or partly in India and partly outside India;

•(viii) transfer loans and advances granted by it, with or without the securities, to

•trusts, for consideration;

•(ix) set aside loans or advances held by the Institution and issue and sell securities

•based upon such loans or advances so set aside in the form of debt obligations, trust

•certificates of beneficial interest or other instruments, by whatever name called, and

•act as a trustee for the holders of such securities;

(x)assign securities issued to the Institution;

•(xi) subscribe to or purchase, underwrite, acquire, hold or sell stocks, shares,

•bonds, debenture stocks, debt securities, obligations and securities, commercial papers,

•certificates of deposit or debentures issued or guaranteed by any company or trust or

•registered society or co-operative society or association or the Central Government or

•any State Government or any financial institution funding infrastructure, to facilitate

•financing of infrastructure projects in India, or partly in India and partly outside India,

•or to facilitate deepening of bond market for infrastructure financing;

•(xii) borrow or raise money by way of loans or otherwise both in rupees and

•foreign currencies or secure the payment of money by the issue and sale of debentures,

•debenture stock, bonds, obligations, mortgages and securities of all kinds, either

•perpetual or terminable and either redeemable or otherwise and charge or secure the

•same by trust deed, or otherwise on the undertaking of the Institution including its

•authorised or issued capital, or upon any specific property and rights, present or

•future, of the Institution or otherwise, howsoever;

•(xiii) borrow money from the Central Government, scheduled banks, financial

•institutions, mutual funds, any class of persons, and from any other institution or

•authority or organisation notified by the Central Government, on such terms and

•conditions as may be agreed upon and accept short term loans only for managing

•asset liability mismatches and not for any other business purpose;

•(xiv) buy or sell, or enter into such other dealings in foreign exchange as may be

•necessary for the discharge of its functions;

•(xv) issue participation certificates or debt securities, and promote and facilitate

•securitisation of loan portfolio of companies and other entities engaged in the

•development and financing of infrastructure and create and develop a secondary

•market for the securitised receivables including by way of acting as an intermediary;

•(xvi) lend money with or without security and make advances upon, hold in

•trust, issue, buy, sell or otherwise acquire or dispose of on commission or otherwise

•any of the securities or investments or act as agent for any of the like purpose;

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•(xvii) lend to or invest in or acquire professional or technical services of

•companies operating in the infrastructure domain across the life cycle of projects;

•(xviii) act as an intermediary in respect of transactions or services relating to

•debt securities issued by infrastructure companies and financial institutions for financing

•infrastructure projects located in India, or partly in India and partly outside India,

•including by way of extension of credit enhancement facilities;

•(xix) take an active role in negotiations and discussions with various Government

•authorities and stakeholders for effective dispute resolution in the field of infrastructure

•financing;

•(xx) apply for, receive, accept, administer and manage grants, aids, subsidies,

•funds or donations, etc., from national and international sources including World

•Bank, New Development Bank, Japan International Co-operation Agency, United States

•Agency for International Development, Kreditanstaltfür Wiederaufbau, European

•Investment Bank, Asian Development Bank, International Finance Corporation and

•other organisations and agencies, and organise and facilitate foreign participation in

•infrastructure development projects;

•(xxi) issue guarantee, letters of comfort, or letters of credit for loans or credit

•arrangements made, or, debentures or bonds issued, by any financial institution funding

•infrastructure projects in India, or partly in India and partly outside India;

•(xxii) borrow money from the Reserve Bank repayable on demand or on the

•expiry of fixed periods not exceeding ninety days from the date on which the money is

•so borrowed against the security of stocks, funds or securities (other than immovable

•property) in which a trustee is authorised to invest trust money by any law for the time

•being in force in India;

•(xxiii) borrow money from the Reserve Bank against bills of exchange or

•promissory notes arising out of bona fide commercial or trade transactions maturing

•within five years from the date of the borrowing;

•(xxiv) convert any debt it has extended to a borrower into equity; and

•(xxv) any other kind of business or undertake any other kind of activity which

•the Central Government in consultation with the Reserve Bank may authorise.

(2)In furtherance of sub-section ( 1), the Institution, either by itself or through its

•subsidiaries or joint ventures or in association with others, may carry out the following

•functions, namely—

(a)organise and facilitate participation from the Central Government, public

•sector, private sector and institutional investors from India or overseas in infrastructure

•development projects located in India, or partly in India and partly outside India;

(b)provide facilities for training, for dissemination of information and the

•promotion of research including the undertaking of studies, researches,

•techno-economic and other surveys in the field of infrastructure development and it

•may for the said purposes make loans or advances or grants including grants by way

•of provision for fellowships and chairs to any institution;

(c)provide technical, legal, marketing and administrative assistance to any person

•engaged in infrastructure development activities;

(d)provide consultancy services in the field of infrastructure development,

•project structuring, capital structuring or operations subsequent to commissioning

•and other related matters in or outside India;

(e)act as trustees of any deeds constituting or securing any debentures,

•debenture stock, or other securities or obligation and undertake and execute any other

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•trusts, and also undertake the office of or exercise the powers of executor, administrator,

•receiver, treasurer, custodian and trust corporation;

(f)acquire an undertaking including the business, assets and liabilities of any

•institution the principal object of which is the promotion or development of infrastructure

•financing for projects located in India, or partly in India and partly outside India;

(g)act as a financial intermediary for the purpose of promotion, financing and

•development of infrastructure projects and facilities located in India, or partly in India

•and partly outside India, through developing and disseminating appropriate financial

•instruments, negotiating loans and advances of all nature, and formulating schemes

•for mobilisation of resources;

(h)structure proposals and negotiate agreements, with the proponents of

•infrastructure projects and with investors in infrastructure projects located in India, or

•partly in India and partly outside India;

(i)open any account in any bank in or outside India or make any agency

•arrangement with, or act as an agent or correspondent of, any bank or other institution

•in or outside India; and

(j)do such other acts and things as may be incidental to, or consequential upon,

•the exercise of its powers or the discharge of its duties under this Act or any other law

•for the time being in force, including sale or transfer of any of its assets.

(3)The Central Government may, on a request being made to it by the Institution,

•guarantee the bonds, debentures and loans issued by the Institution as to the repayment of

•principal and the payment of interest at such rate, terms and conditions as may be agreed by

•the Central Government.

SECTION Section 85

Untitled Section

18.(1) The Institution shall not make any loan or advance on the security of its own

•bonds or debentures.

(2)The Institution shall not make loans or advances to any person or body of persons

•of which any of the directors of the Institution is a proprietor, partner, director, employee or

•guarantor, or in which one or more directors of the Institution hold substantial interest.

(3)Sub-section (2) shall not apply to any borrower if any director of the Institution is

•nominated by the Institution or the Central Government as director on the Board of such

•borrower or is elected on the Board of such borrower by virtue of shares held in the borrower

•by the Institution.

Explanation.— For the purpose of this section, "substantial interest" in relation to a

•borrower, means the beneficial interest held by one or more of the directors of the Institution

•or by any relative of such director as defined in clause ( 77) of section 2 of the Companies

•Act, 2013 whether singly or taken together, in the shares of the borrower, and the aggregate

•amount paid-up on which either exceeds fifty lakhs rupees or two per cent. of the paid-up

•share capital of the borrower, whichever is lesser or such other threshold as may be prescribed.

SECTION Section 86

Untitled Section

19.(1) Except with the consent of the Board and subject to such conditions as may be

•prescribed, the Institution shall not enter into any contract or arrangement with a related

•party with respect to—

(a)sale, purchase or supply of any goods or materials;

(b)selling or otherwise disposing of, or buying, property of any kind;

(c)leasing of property of any kind;

(d)availing or rendering of any services;

(e)appointment of any agent for purchase or sale of goods, materials, services

•or property;

•Prohibited

business.

•Related party

transactions.

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(f)such related party's appointment to any office or place of profit in the Institution,

•its subsidiaries or joint ventures or associate companies;

(g)underwriting the subscription of any securities, or derivatives thereof, of the

•Institution:

•Provided that no contract or arrangement involving transactions exceeding such

•sums as may be specified by regulations, shall be entered into except with the prior

•approval in the general meeting of the shareholders:

•Provided further that no shareholder shall vote in such general meeting to approve

•any contract or arrangement which may be entered into by the Institution, if such

•shareholder is a related party:

•Provided also that nothing in this sub-section shall apply to any transactions

•entered into by the Institution in its ordinary course of business, other than transactions

•which are not on an arm's length basis:

•Provided also that the requirement of approval under the first proviso shall not

•be applicable for transactions entered into between the Institution and its wholly

•owned subsidiary, if any, whose financial statements are consolidated with the

•Institution and placed before the shareholders at the general meeting for adoption.

Explanation.—In this sub-section,—

(a)the expression "office or place of profit" means any office or place—

(i)where such office or place is held by a director, if the director holding it

•receives from the Institution anything by way of remuneration over and above

•the remuneration to which he is entitled as director, by way of salary, fee,

•commission, perquisites, any rent-free accommodation, or otherwise;

•(ii) where such office or place is held by an individual other than a director

•or by any firm, private company or other body corporate, if the individual, firm,

•private company or body corporate holding it receives from the Institution

•anything by way of remuneration, salary, fee, commission, perquisites, any

•rent-free accommodation, or otherwise;

(b)the expression "arm's length transaction" means a transaction between two

•related parties that is conducted as if they were unrelated, so that there is no conflict

•of interest.

(2)Every contract or arrangement entered into under sub-section (1) shall be referred

•to in a report made by the Board to the shareholders, along with the justification for entering

•into such contract or arrangement.

(3)Where any contract or arrangement is entered into by a director or any employee,

•without obtaining the consent of the Board or approval by a resolution in the general

•meeting of the shareholders under sub-section (1) and if it is not ratified by the Board or, as

•the case may be, by the shareholders at a meeting within three months from the date on

•which such contract or arrangement was entered into, such contract or arrangement shall be

•voidable at the option of the Board or, as the case may be, of the shareholders and if the

•contract or arrangement is with a related party to any director, or is authorised by any

•other director, the directors concerned shall indemnify the Institution against any loss

•incurred by it.

(4)Without prejudice to anything contained in sub-section (3), it shall be open to the

•Institution to proceed against a director or any other employee who had entered into such

•contract or arrangement in contravention of the provisions of this section for recovery of

•any loss sustained by it as a result of such contract or arrangement.

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(5)Any director or employee of the Institution who had entered into or authorised a

•contract or arrangement in violation of the provisions of this section, shall be liable to pay

•penalty of a sum of up to twenty-five lakh rupees.

SECTION Section 87

Untitled Section

20.(1) The performance of the Institution shall, once in every five years, be reviewed

•by an external agency to be appointed by the Central Government.

(2)The external agency shall review the performance of the Institution for the last five

•years with respect to the purpose and objectives of the Institution as set out in section 4 and

•shall take into account such key performance indicators as may be prescribed.

(3)The external agency shall submit a report of its findings to the Board which shall

•forward a copy thereof along with action taken, if any, pursuant to such report to the Central

•Government within a period of three months from the date of receipt of the report.

SECTION Section 88

Untitled Section

•CHAPTER V

•G

•OVERNMENT GRANTS, GUARANTEES AND OTHER CONCESSIONS

SECTION Section 89

Untitled Section

21.( 1) The Central Government may support the Institution through grants or

•contribution, as and when necessary, in the form of cash or marketable Government securities.

(2)Without prejudice to the generality of the foregoing , the Central Government shall,

•by the end of the first financial year from the establishment of Institution, grant or contribute

•an amount of five thousand crore rupees to the Institution in the form of cash or marketable

•Government securities.

SECTION Section 9

Untitled Section

5.Authorised share capital.

SECTION Section 90

Untitled Section

22.The Government shall prescribe a concessional rate of fees, not exceeding 0.1 per

•cent at which Government guarantee may be extended to the Institution for borrowings from

•multilateral institutions, sovereign wealth funds, and such other foreign institutions as may

•be prescribed.

SECTION Section 91

Untitled Section

23.Hedging costs in connection with any borrowing of foreign currency by the

•Institution for the purposes of granting loans and advances or its repayment, to insulate the

•Institution from any fluctuations in the rates of exchange, may be reimbursed by the Central

•Government in part or in full.

SECTION Section 92

Untitled Section

•CHAPTER VI

•A

•CCOUNTS, AUDIT AND REPORT

SECTION Section 93

Untitled Section

24.(1) The Institution shall establish a reserve fund to which may be transferred such

•sums as the Board may deem fit out of the annual profits accruing to the Institution:

•Provided that the sums to be transferred under this sub-section shall not be less than

•twenty per cent. of the annual profits accruing to the Institution.

(2)After making provisions for bad and doubtful debts, depreciation of assets and for

•all other matters for which provision is necessary or expedient or which is usually provided

•for by bankers and for the reserve fund referred to in sub-section (1), and after transferring

•a part of the profit to such other reserves or funds as may be considered appropriate, the

•Board may out of its net profits propose a dividend.

SECTION Section 94

Untitled Section

25.(1) The balance-sheet and accounts of the Institution shall be prepared in such

•form and manner as may be prescribed.

(2)The Board shall cause the books and accounts of the Institution to be closed and

•balanced as on the 31st day of March each year or such other date as the Board may

determine.

SECTION Section 95

Untitled Section

26.(1) The accounts of the Institution shall be audited by auditors duly qualified to

•act as auditors under sub-section (1) of section 141 of the Companies Act, 2013, who shall be

•appointed by the Institution in general meeting of the shareholders out of the panel of

•Performance

•review of

Institution.

•Grants and

contribution.

•Concessional

•rate of

•Government

guarantee.

•Hedging costs.

•Disposal of

•profits

•accruing to

•Institution, to

•reserve fund.

•Preparation of

•balance-sheet

•and accounts.

Audit.

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•auditors approved by the Reserve Bank for such term and on such remuneration as the

•Reserve Bank may fix.

(2)The auditors shall be supplied with a copy of the annual balance-sheet of the

•Institution and it shall be their duty to examine it together with the accounts and vouchers

•relating thereto and they shall have a list delivered to them of all books kept by the Institution

•and shall at all reasonable times have access to the books, accounts, vouchers and other

•documents of the Institution.

(3)The auditors may, in relation to such accounts, examine any director or any officer

•or other employee of the Institution and shall be entitled to require from the Board or officers

•or other employees of the Institution such information and explanation as they may think

•necessary for the performance of their duties.

(4)The auditors shall make a report to the Institution upon the annual balance-sheet

•and accounts examined by them and in every such report they shall state whether in their

•opinion the balance-sheet is a full and fair balance-sheet containing all necessary particulars

•and properly drawn up so as to exhibit a true and fair view of the state of affairs of the

•Institution and in case they had called for any explanation or information from the Board or

•any officer or other employee of the Institution, whether it has been given and whether it is

satisfactory.

(5)The Institution shall furnish to the Central Government and the Reserve Bank

•within four months from the date on which its accounts are closed and balanced, a copy of

•its balance-sheet and accounts together with a copy of the auditor's report and a report of

•the working of the Institution during the relevant year, and the Central Government shall, as

•soon as may be after they are received by it, cause the same to be laid before each House of

Parliament.

SECTION Section 96

Untitled Section

27.The Institution shall furnish, from time to time, to the Central Government and to

•the Reserve Bank, such returns as the Central Government or the Reserve Bank may require.

SECTION Section 97

Untitled Section

•CHAPTER VII

•M

•ISCELLANEOUS

SECTION Section 98

Untitled Section

28.(1) Any sums received by a financial institution for refinancing from the Institution

•shall, to the extent of the accommodation granted by the Institution and remaining

•outstanding, be deemed to have been received by the financial institution in trust for the

•Institution and shall accordingly be paid by such financial institution to the Institution.

(2)Where any accommodation has been granted by the Institution to a financial

•institution, all securities held, or which may be held, by such financial institution on account

•of any transaction in respect of which such accommodation has been granted, shall be held

•by such financial institution in trust for the Institution.

SECTION Section 99

Untitled Section

29.(1) Any person who intends to set up a development financial institution, in

•addition to the Institution established under this Act, shall make an application to the Reserve

•Bank for licence.

(2)The Reserve Bank may in consultation with the Central Government, grant licence

•subject to such criteria, terms and conditions as may be specified by the Reserve Bank by

regulations.

(3)The Institution to which licence is granted under sub-section (2) shall be subject to

•the provisions of the Reserve Bank of India Act, 1934 or the Banking Regulation Act, 1949,

•as the case may be.

(4)The regulations made by the Reserve Bank shall apply to the Institution established

•under this Act to such extent as are not inconsistent with the provisions of this Act.

•Returns and

report.

•Receivables to

•be held in

trust.

•Setting up of

•other

•development

•financial

institution.

•10 of 1949.

•2 of 1934.

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