NBFID would work as a principal development financial institution (DFIs)
Key features of the Bill – passed in parliament
Salient features of NBFID
I. Source of funds: NBFID may raise money in the form of loans or otherwise both in Indian rupees and foreign currencies or secure money by the issue and sale of various financial instruments including bonds and debentures. NBFID may borrow money from: (i) central government, (ii) Reserve Bank of India (RBI), (iii) scheduled commercial banks, (iii) mutual funds, and (iv) multilateral institutions such as World Bank and Asian Development Bank
II. Management of NBFID: NBFID will be governed by a Board of Directors. The members of the Board include: (i) the Chairperson appointed by the central government in consultation with RBI, (ii) a Managing Director, (iii) up to three Deputy Managing Directors, (iv) two directors nominated by the central government, (v) up to three directors elected by shareholders, and (vi) a few independent directors (as specified). A body constituted by the central government will recommend candidates for the post of the Managing Director and Deputy Managing Directors. The Board will appoint independent directors based on the recommendation of an internal committee.
III. Support from the central government: The central government will provide grants worth Rs 5,000 crore to NBFID by the end of the first financial year. The government will also provide guarantee at a concessional rate of up to 0.1% for borrowing from multilateral institutions, sovereign wealth funds, and other foreign funds. Costs towards insulation from fluctuations in foreign exchange (in connection with borrowing in foreign currency) may be reimbursed by the government in part or full. Upon request by NBFID, the government may guarantee the bonds, debentures, and loans issued by NBFID
IV. Prior sanction for investigation and prosecution: No investigation can be initiated against employees of NBFID without the prior sanction of: (i) the central government in case of the chairperson or other directors, and (ii) the managing director in case of other employees. Courts will also require prior sanction for taking cognizance of offences in matters involving employees of NBFID
Policy and Economy
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