THE NATIONAL BANK FOR FINANCING INFRASTRUCTURE AND  
DEVELOPMENT ACT, 2021 
_______________ 

ARRANGEMENT OF SECTIONS 
______________ 

CHAPTER I 

PRELIMINARY 

SECTIONS 

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

CHAPTER II 

ESTABLISHMENT AND INCORPORATION OF INSTITUTION 

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

CHAPTER III 

BOARD OF DIRECTORS AND MANAGEMENT 

6.  Board of Directors. 
7.  Management  
8.  Delegation of powers. 
9.  Term of office and other terms and conditions of service of Chairperson and other directors 

of Board. 

10.  Disqualification and removal of directors from office. 
11.  Removal of Chairperson and other directors in certain cases. 
12. Vacation and resignation of office by directors. 
13.  Meetings of Board. 
14.  Defects in appointment not to invalidate acts, etc. 
15. Committees of Board. 
16.  Disclosure of interest by members of Board or of committees. 

CHAPTER IV 

ACTIVITIES OF INSTITUTION 

17.  Functions and powers of Institution. 
18.  Prohibited business. 
19.  Related party transactions.  

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SECTIONS 

20.  Performance review of Institution. 

GOVERNMENT GRANTS, GUARANTEES AND OTHER CONCESSIONS 

CHAPTER V 

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

CHAPTER VI 

ACCOUNTS, AUDIT AND REPORT 

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

CHAPTER VII 

MISCELLANEOUS 

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

The FIRST SCHEDULE 

The SECOND SCHEDULE 

The THIRD SCHEDULE 

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THE NATIONAL BANK FOR FINANCING INFRASTRUCTURE AND 

DEVELOPMENT ACT, 2021 

ACT NO. 17 OF 2021 

[28th March, 2021.] 

An Act to establish the National Bank for Financing Infrastructure and Development to support 
the development of longterm 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. 

BE it enacted by Parliament in the Seventy-second Year of the Republic of India as follows:— 

CHAPTER I 

PRELIMINARY 

1.  Short  title  extent  and  commencement.—(1)  This  Act  may  be  called  the  National  Bank  for 

Financing Infrastructure and Development Act, 2021. 

(2) It extends to the whole of India. 

(3) It shall come into force on such date1 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. 

2. Definitions.—(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  Directors 
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; 

1. 19th April, 2021- Sections 2, sub-sections (1), (2) and (4) of section 3, 4 to 14, sub-section (3) of section 15, 16 to 23 and 25 to 
48 vide notification No. S.O. 1657(E), dated 16th April, 2021, see Gazette of India, Extraordinary, Part II, sec. 3 (ii). 

19th April 2021-clause (2) of sub-section (1) of section 11, vide notification No. S.O. 1658(E), dated 19th April, 2021, see 

Gazette of India, Extraordinary, Part II, sec. 3(ii). 

30th November 2021-Sub-section (1), (2), (4) and (5) of section 15; and section (24), vide notification No. S.O. 4911(E), dated 

30th November, 2021, see Gazette of India, Extraordinary, Part II, sec. 3 (ii).     

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(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 in clause (m) of sub-section (1) of 
section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security 
Interest Act, 2002 (54 of 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  in  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 in sub-section (9) of section 2 of the Insurance 

Act, 1938 (4 of 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 assigned to it in clause (l) of sub-section (1) of section 

2 of the Pension Fund Regulatory and Development Authority Act, 2013 (23 of 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; 

(t) “Reserve Bank” means the Reserve Bank of India established under the Reserve Bank of India 

Act, 1934 (2 of 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 (9 of 1872), the Indian Partnership Act, 1932 (9 of 1932), the Securities Contracts (Regulation) Act, 
1956 (42 of 1956), the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Recovery of 
Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993), the Limited Liability Partnership 
Act, 2008 (6 of 2009) and the Companies Act, 2013 (18 of 2013), shall have the meanings respectively 
assigned to them in those Acts. 

CHAPTER II 

ESTABLISHMENT AND INCORPORATION OF INSTITUTION 

3. Establishment and incorporation of Institution.—(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. 

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(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. 

4. Purposes and objectives of Institution.—(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 co-ordinate 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. 

5. Authorised share capital.—(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,  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. 

CHAPTER III 

BOARD OF DIRECTORS AND MANAGEMENT 

6. Board of Directors.—(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; 

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(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 recommendations 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 recommendations 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 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 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 (18 of 2013), for the purpose of immunities available 
to independent directors. 

7.  Management.—(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. 

8. Delegation of powers.—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. 

9. Term of office and other terms and conditions of service of Chairperson and other directors of 
Board.—(1) The Chairperson, Managing Director, Deputy Managing Directors and other directors of the 
Board other than the directors nominated by the Central Government under 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. 

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(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  the  Board other than the directors  nominated  by  the 
Central Government under clause (d) of sub-section (1) of 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. 

10.  Disqualification  and  removal  of  directors  from  office.—(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 

(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. 

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

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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 9, by giving notice of not less than three 
months in writing or three months' salary and allowances in lieu of such notice. 

12.  Vacation and resignation of office by directors.—(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 the Board, such director shall be deemed to have vacated his office. 

13. Meeting of Board.—(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 regulations. 

(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. 

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

15.  Committees  of  Board.—(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. 

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(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. 

16. Disclosure of interest by members of Board or of committees.—(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: 

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 in clause (11) of section 2 of the Companies Act, 2013 (18 
of  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. 

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CHAPTER IV 

ACTIVITIES OF INSTITUTION 

17. Functions and powers of Institution.—(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 (2 of 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; 

(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 stocks, 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; 

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(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 an agent for any of the like purpose; 

(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 Cooperation Agency, United States Agency for International Development, Kreditanstalt 
für  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; 

11 

 
(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 stocks, or other 
securities or obligation and undertake and execute any other 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. 

18. Prohibited business. —(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 (18 of 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. 

19.    Related  party  transactions.—(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— 

12 

 
(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; 

(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 

13 

 
contravention of the provisions of this section for recovery of any loss sustained by it as a result of such 
contract or arrangement. 

(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. 

20. Performance review of Institution.—(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. 

CHAPTER V 

GOVERNMENT GRANTS, GUARANTEES AND OTHER CONCESSIONS 

21.  Grants  and  contribution.—  (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. 

22. Concessional rate of Government guarantee.—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. 

23.  Hedging  costs.—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. 

CHAPTER VI 

ACCOUNTS, AUDIT AND REPORT 

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

25.  Preparation  of  balance-sheet  and  accounts.—(1)  The  balance-sheet  and  accounts  of  the 

Institution shall be prepared in such form and manner as may be prescribed. 

14 

 
 
 
 
(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. 

26. Audit.—(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  (18  of  2013),  who  shall  be 
appointed by the Institution in general meeting of the shareholders out of the panel of 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. 

27. Returns and report.—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. 

CHAPTER VII 

MISCELLANEOUS 

28. Receivables to be held in trust.—(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. 

29. Setting up of other development financial institution.—(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) Any institution to which licence is granted under sub-section (2) shall be subject to the provisions 
of the Reserve Bank of India Act, 1934 (2 of 1934) or the Banking Regulation Act, 1949 (10 of 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. 

15 

 
30.  Officers  and  employees.—(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. 

31.  Power  of  Central  Government  to  make  rules.—(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 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 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; 

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

16 

 
32. Power of Board to make regulations.—(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, 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, 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. 

33.  Rules  and  regulations  to  be  laid  before  Parliament.—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. 

34. Protection of action taken in good faith.—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. 

35.  Sanction  for  enquiry,  inquiry  investigation  and  prosecution.—(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: 

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 

17 

 
writing by the Central Government or the Managing Director, as the case may be, 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 second proviso 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 (49 of 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 shall not be considered as deemed approval for the initiation 
of prosecution. 

36. Appointment of directors by Institution to prevail.—(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 (18 of 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 (18 of 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. 

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

18 

 
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. 

38. Obligations as to fidelity and secrecy.—(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. 

39. Adjudication.—(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 16 or section 19, as the 
case may be, and a right to prefer an appeal against any order imposing the penalty. 

40.  Indemnity  of  directors.—(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. 

41. Bankers’ Books of Evidence Act, 1891 to apply in relation to the Institution.—The Bankers' 
Books Evidence Act, 1891 (18 of 1891), shall apply in relation to the Institution as if it were a bank as 
defined in section 2 of that Act. 

42.  Sections  34A  and  36AD  of  the  Banking  Regulation  Act,  1949  (10  of  1949)  to  apply  to 
Institution.—The provisions of sections 34A and 36AD of the Banking Regulation Act, 1949 (10 of 1949) 
shall apply to the Institution. 

43. Liquidation of Institution.—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. 

44.  Power  of  Central  Government  to  issue  directions.—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. 

45.  Overriding  effect  of  this  Act.—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. 

46. Power to remove difficulties.— (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. 

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

House of Parliament. 

47. Amendment of Act 2 of 1934.—The Reserve Bank of India Act, 1934 shall be amended in the 

manner specified in the Second Schedule. 

48.  Amendment  of  Act  10  of  1949.—The  Banking  Regulation  Act,  1949  shall  be  amended  in  the 

manner specified in the Third Schedule. 

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. 

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) 

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THE SECOND SCHEDULE 

(See section 47) 

AMENDMENTS TO THE RESERVE BANK OF INDIA ACT, 1934 

1. Amendment of Section 2.—In the Reserve Bank of India Act, 1934 (2 of 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;'. 

2.  Amendment of section 17.—In section 17 of the principal Act,— 

(a) in clause (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 clause (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; 

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(c) after clause (4K), the following clause 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 clause (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. 

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

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

(a) in clause (c), after the words “or the Small Industries Bank,” at both the places, 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. 

THE THIRD SCHEDULE 

(See section 48) 

AMENDMENTS TO THE BANKING REGULATION ACT, 1949 

1. Amendment of section 5.—In the Banking Regulation Act, 1949 (10 of 1949) (hereinafter referred 

to as the principal Act), in 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;'. 

2. Amendment of section 18.—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. 

3. Amendment of section 34A.—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. 

22 

 
 
4. Amendment of section 36AD.—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. 

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