NaBFID- Role and Responsibilities as an AIFI

December 5, 2024

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One of the latest All India Financial Institutions, NaBFID is going to be on infrastructure financing and development pan across the country. This represents an important strategic step toward bridging the considerable requirement for integrated financing solutions in the infrastructure space in India.

You must read on to learn about AIFI, NaBFID, and the regulatory authorities governing AIFI and related matters. Read on to learn more about the career prospects in NaBFID and more.

What is an AIFI?

An All India Financial Institution is essentially a special kind of a financial institution that is undertaken at the national level. They help significantly to support various sectors of the economy. The institutions are mainly constituted and governed by Reserve Bank of India, or for that matter, RBI.

AIFIs constitute the backbones of India’s financial structure mainly engaged in long-term finance and credit facilities to specific sectors such as agriculture, industry, infrastructure, housing, and small-scale industries. They play an important role in facilitating economic development through financial assistance, refinancing facilities, and developmental services to these priority sectors that, in turn lead to employment and infrastructure developments.

Important All India Financial Institutions are:

National Bank for Agriculture and Rural Development (NABARD): Provides credit, refinancing, and other supporting services in agriculture and rural development.
Small Industries Development Bank of India (SIDBI): Offers financial assistance, refinancing, and developmental support for the growth of small-scale industries.
Export-Import Bank of India (EXIM Bank): The bank facilitates international trade by India by means of financial assistance, export credits, and advisory services extended to exporters and importers.
National Housing Bank (NHB): It supports the housing sector’s development by offering financial and refinancing facilities to the housing finance companies and institutions.

They go ahead with specific mandates, directives and funds and are often bailed out or rescheduled by the RBI. The very role of such institutions goes a long way in advancing funds to the priority sectors, which generally are carried out with concessionary terms and developmental objectives and considerably contribute to the growth and stability of the nation’s economy. The RBI controls and oversees their activities for compliance with established standards for financial stability and ensuring the integrity of the system of finances.

There are five AIFIs till date; one of the latest ones is National Bank for Financing Infrastructure and Development. During the year 2022, Reserve Bank of India issued an advertisement declaring National Bank for Financing Infrastructure and Development as All India Financial Institution (AIFI) while taking into consideration RBI Act 1934.

How NaBFID is an AIFI?

National Bank for Financing Infrastructure and Development was established in 2021 as a development financial institution to finance India’s infrastructure. Though still relatively new, the roles and functions assigned to NaBFID seem quite similar to those of All India Financial Institution, AIFI.

NaBFID can be termed AIFI because there are various parallels drawn between the two ideas:

Development Focus: NABFID and other AIFIs focus on supporting and promoting economic development. It focuses on infrastructure development while other AIFIs target agriculture, housing, or industries.

Financial Support: They give financial support in the form of loans and investments to projects which contribute to national development by filling funding gaps in strategic sectors.

Government Support: Both of these institutions are normally funded by the government, either directly or through guarantees or other policy instruments, to ensure all the required resources and stability to discharge their mandates.

Long-term Financing: For NABFID and other AIFIs, long-term financing is important, as these are for large scale and long-duration projects which commercial banks may consider too risky or infeasible.

They play an important role in the execution of policies and plans by the government toward sectoral growth and improvement of infrastructures harmonious with the national economic goals.

Although NaBFID is a new entity and its operational framework and impact will change with time, its establishment is in tune with the AIFIs’ core principles and objectives. It’s supposed to fill the infrastructure funding gap, support national projects, and significantly contribute toward India’s economic growth as it would provide long-term financing solutions for critical infrastructural needs.

Functions and Responsibilities of NaBFID as an AIFI

NaBFID is the short form of National Bank for Financing Infrastructure and Development in India. It is established with an objective of financing and developing infrastructure in the country. Being a relatively new institution, the functions and responsibilities of NaBFID as an AIFI are crucial to the development and promotion of infrastructural projects across all sectors. Major Functions of NaBFID as an AIFI

Infrastructure Financing: NaBFID shall be the long term financing institution that will source funding for infrastructure projects that will be undertaken in sectors such as transportation, energy, water and sanitation, communication, and others. They will help in funding this through loans, credit facilities, or other financial products that may best fit the requirements of infrastructure development.

Investment Facilitation: NaBFID would facilitate investments, both domestic and foreign. It would help to bridge the finance gap and accelerate the development of infrastructure in India with respect to speed.

Refinancing and Re-lending: Similar to other AIFIs, NaBFID will engage in refinancing operations. It can refinance or provide financing support to other financial institutions that lend to infrastructure projects. The mechanism helps increase the availability of long-term funds for such projects.

Advisory and technical support: – NaBFID may provide advisory, technical, and expert services to an infrastructure development stakeholder on structuring of a project, risk assessment, financial modeling, and implementation strategy among others.

Risk mitigation: strategy- NaBFID may engage in the risk-sharing mechanism or give guarantees that lower the perceived risks of investment in infrastructural projects in attracting more investors and financial institutions to these projects.

Policy Advocacy and Development: NaBFID will engage in policy advocacy to policymakers and regulatory authorities to smoothen regulatory hurdles, develop enabling policies, and create an appropriate environment for infrastructure financing and development in the country.

Monitoring and Evaluation: There is a good chance that NaBFID will monitor the infrastructure projects it finances for timely completion and optimum utilization of funds. Periodic evaluation would highlight difficulties and corrective measures could be undertaken for both the ongoing and future projects.

Compliance and Regulatory Supervision: Since NaBFID would be an AIFI, the RBI or any other appropriate regulatory authority would govern it and ensure that its rules are followed. Compliance with the regulations implies keeping the financial system stable and sound.

Together, these functions would play a role for NaBFID as an AIFI by providing finance, expertise, and an enabling environment that would foster infrastructure investments to contribute to the growth and development of the nation. Specific roles and responsibilities would likely change over time based on the shifts in economic conditions and policy directives.

Key Responsibilities

Main Duty Set up and handle subsidiaries, joint ventures, or branches in India and abroad Conduct activities related to infrastructure finance operations and ensure a streamlined set of personnel who should work out infrastructural finance related problems. To offer consulting services to Central Government, Reserve Bank and other organizations that will be involved with infrastructural finance.

Establish trusts under the Indian Trusts Act, 1882 with objects to set up funds that help raise finance for infrastructure projects in India
Promotion and development of a deep and liquid bond, loan and derivative market
Lending and investment to infrastructure projects located wholly or partly outside India
Advances for raising of finance on any consideration.
Take over or re-finance loans advanced by banks for financing infrastructure projects within India, or projects partly within India and partly outside India.
Transfer loans and advances advanced by the institution either with or without securities to trusts on consideration.
The entity should issue loans or advances held by the institution and issue and sell securities based on such loans or advances, in the form of debt obligations, beneficial interest trust certificates, or other instruments. The entity also needs to act as a trustee for the holders of such securities.
Transfer securities issued to the institution to other entities.

How many job opportunities are there for NaBFID?

NaBFID is one of the new institutions dealing with funding and promoting the development of infrastructures in India, thus giving a wide array of jobs within the different functional areas. The jobs range from entry-level up to managerial level, thus focusing on those who have diversified skill sets and areas of expertise. Some of the possible jobs in NaBFID are:

Financial analysis: All those procedures of assessing projects undertaken through infrastructure in terms of assessing viability of the project toward becoming prudent in financial resource managed by NaBFID are significantly helpful by those experts whose proficiency is in financial analysis, modelling and risk assessment.

Project Managers: The project managers are very highly qualified to undertake the infrastructure projects which the agency finances. They ensure that the projects attain time schedules, budget provisions, quality requirements, and legal/ regulatory stipulations.

Infrastructure Investment Specialists: This is people with experience in infrastructure investment, asset management, and deal structuring who shall identify the investment opportunities, carry out due diligence, and administer the investment portfolio of NaBFID.

Legal and Compliance Officers: NaBFID shall require the legal experts and compliance officers to observe the regulatory frameworks, draft contracts, mitigate legal risks, and keep in line with the relevant laws and guidelines.

Risk Managers: NaBFID shall require professional risk management experts to analyze and mitigate the risks that infrastructural investments pose, develop the risk management policies, and maintain the stability and security of NaBFID’s portfolio.

Human Resources and Administration: The labor force demand shall call for employees with human resource and administrative functions to meet the labor force needs, recruitment, training, employee relations, and administration functions at NaBFID.

Information Technology Experts: Information technology experts will play critical roles in implementing and operating information technology infrastructure, cybersecurity data analytics, and software systems associated with NaBFID.

Public Relations and Communications Officers: Specialists in public relations, communications, and marketing will be hired to assist in the branding of NaBFID in the management of relations with a diversity of stakeholders and to build awareness more generally of the programs in it.

Economists and Policy Analysts: Economists and policy analysts will be in a great position to conduct macroeconomic analyses and begin policies because they are aware of the trends of the economy that influence the infrastructures’ development.

Environmental and social impact specialists: These would be specialists who are knowledgeable about issues related to environmental sustainability and assessing social impacts of projects. They would ensure that projects funded by NaBFID are environmentally compliant while at the same time socially responsible.

Some examples of some of the jobs one could take up in NaBFID. With the expansion of the institution, one would definitely see opportunities across departments and disciplines on a level of activities being practiced. All such intending applicants who would like to seek employment through job posts at NaBFID would revisit time and again and visit the authentic webpage or the employment portal as updates regarding job posts open/closed are provided regularly in tandem with the requirements to enhance the strategy of the institutions and adapt to the changes required by the industry in the infrastructure financing.

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National Bank for Financing Infrastructure and Development has released the NABFID this year’s notification with 37 posts in different designations in which the role of the analyst is in the risk management generalist administration accounts Lending operations, and so many others covering human resource, investment & treasury, Information Technology & operations, the legal, internal audit & compliance, company secretariat and strategic development & partnership of economists. All of the above posts exam date shall be issued by the officials of NaBFID. Applicant can download the entire NaBFID Exam 2024 advertisement along with the following points, before applying: All details regarding exam pattern, syllabus, and selection process.

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Conclusion

The collective contribution of NaBFID as an AIFI will focus on enhancing India’s infrastructure growth, creating an environment that attracts investment, and therefore economic development.With growth in this institution, there are many career opportunities to search in various departments and disciplines. Interested candidates can look at the NaBFID website or through any employment portal for postings of job vacancies and job descriptions. Such change in NaBFID functions constantly makes it a fulfilling career, particularly for a person who is eager to contribute towards the infrastructure development in India. All the very best. The ixamBee team puts in its sincere effort for your career.

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