(1) This Act may be called the National Bank forFinancing Infrastructure and Development Act, 2021.

(2) It extends to the whole of India.

(3) It shall come into force on such date1as the Central Government may, by notification in theOfficial Gazette, appoint and different dates may be appointed for different provisions of this Act and anyreference in any provision to the commencement of this Act shall be construed as a reference to thecoming into force of that provision.

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, seeGazette 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).

(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 ofrecommending candidates for appointment of Managing Director and Deputy Managing Directorsunder sub-section (1) of section 6 and for removal of a director under clause (ii) of sub-section (1) ofsection 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 otherdirectors of the Board appointed or nominated under section 6;

(h) "Executive Committee" means the Executive Committee of the Board constituted under subsection (2) of section 15;

(i) "financial institution" shall have the meaning assigned to it in clause (m) of sub-section (1) ofsection 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of SecurityInterest 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 theCentral Government from time to time;

(l) "Institution" means the National Bank for Financing Infrastructure and Developmentestablished under section 3;

(m) "insurer" shall have the meaning assigned to it in sub-section (9) of section 2 of the InsuranceAct, 1938 (4 of 1938);

(n) "Managing Director" means the director appointed under clause (b) of sub-section (1) ofsection 6;

(o) "Nomination and Remuneration Committee" means the Nomination and RemunerationCommittee 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 section2 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 theregulations made by the Reserve Bank under section 29;

(t) "Reserve Bank" means the Reserve Bank of India established under the Reserve Bank of IndiaAct, 1934 (2 of 1934);

(u) "Risk Management Committee" means the Risk Management Committee of the Boardconstituted 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 ofDebts Due to Banks and Financial Institutions Act, 1993 (51 of 1993), the Limited Liability PartnershipAct, 2008 (6 of 2009) and the Companies Act, 2013 (18 of 2013), shall have the meanings respectivelyassigned to them in those Acts.

(1) There shall be established, for thepurposes of this Act, an Institution to be called the National Bank for Financing Infrastructure andDevelopment as a development financial institution.

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

(1) The Institution shall have developmental andfinancial 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 StateGovernments, regulators, financial institutions, institutional investors and such other relevantstakeholders, in India or outside India, to facilitate building and improving the relevant institutions tosupport the development of long term non-recourse infrastructure financing in India including thedomestic bonds and derivatives markets.

(3) The financial objective of the Institution shall be to lend or invest, directly or indirectly, and seekto attract investment from private sector investors and institutional investors, in infrastructure projectslocated in India, or partly in India and partly outside India, with a view to foster sustainable economicdevelopment in India.

(1) The authorised share capital of the Institution shall be one hundredthousand 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 theauthorised capital into such denomination as it may decide:

Provided further that the Board may, in consultation with the Central Government, increase or reducethe 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 CentralGovernment, 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 asmay be prescribed:

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

(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 ReserveBank;

(b) a Managing Director, to be appointed by the Board, on the recommendations of the Bureauand subject to such procedure and clearances from such agencies, as may be determined by theCentral Government;

(c) not more than three Deputy Managing Directors, each of whom shall be appointed by theBoard, on the recommendations of the Bureau and subject to such procedure and clearances fromsuch 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 theCentral Government;

(e) such number of directors not exceeding three, elected by shareholders in such manner as maybe prescribed, such that a shareholder, other than the Central Government, holding ten per cent. ormore 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 ofdirectors on the Board, whichever is higher, to be appointed by the Board on the recommendations ofthe Nomination and Remuneration Committee:

Provided that if the percentage of holding of issued equity share capital with the shareholders doesnot permit election of three directors or until the assumption of charge by the directors elected by theshareholders, the Board may at any time co-opt such number of independent directors, not exceedingthree, to be appointed by the Board on the recommendations of the Nomination and RemunerationCommittee, who shall hold office until the assumption of charge by the directors elected by theshareholders and an equal number of such co-opted independent directors shall retire in the order of cooption:

Provided further that at least one of the directors specified in clause (e) or in clause (f) shall be awoman.

(2) The Managing Director and Deputy Managing Directors shall be whole-time directors of theBoard.

(3) No person who is a salaried officer or other employee of the Institution shall be appointed as adirector 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) ofsub-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 beindependent directors under the Companies Act, 2013 (18 of 2013), for the purpose of immunitiesavailable to independent directors.

(1) The general superintendence, direction and management of the affairs andbusiness of the Institution shall vest in the Board which shall exercise all powers and do all acts andthings 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 businessprinciples.

The Board may, by general or special order, delegate to any director orcommittee constituted under this Act or to any officer or other employee of the Institution, subject to suchconditions and limitations, if any, as may be specified in the order, such of its powers and functions underthis Act as it may deem necessary.

(1) The Chairperson, Managing Director, Deputy Managing Directors and other directors ofthe 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 reappointment subject to an overall term not exceeding ten years:

Provided that the Managing Director and Deputy Managing Directors shall not hold office as suchafter 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 nominatedor appointed under sub-section (1) of section 6 shall hold office during the pleasure of the authoritynominating or appointing them.

(3) The Chairperson and directors nominated by the Central Government or shareholders andindependent 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 theprofits of the Institution.

(4) The salaries and allowances payable to the Managing Director and Deputy Managing Directorsshall be specified by regulations on the recommendations of the Nomination and RemunerationCommittee guided by market standards.

(5) The term of office and other terms and conditions of service of, the Chairperson, ManagingDirector, Deputy Managing Directors and other directors of the Board other than the directors nominatedby the Central Government under clause (d) of sub-section (1) of section 6, shall be such as may beprescribed.

(6) Notwithstanding anything contained in this Act, no fees shall be payable to any director who is anofficer of the Central Government.

(1) The Central Government mayremove 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, involvesmoral turpitude; or

(d) has acquired such financial or other interest as is likely to affect prejudicially his functions asa director; or

(e) has, in the opinion of the Central Government, so abused his position as to render hiscontinuance 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 hasbeen 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, sentenceor conviction resulting in the sentence or order, until the expiry of seven days from the date on whichsuch appeal or petition is disposed of.

(1) Notwithstanding anythingcontained in section 10,--

(i) the Central Government may, after consulting the Reserve Bank, remove from office theChairperson 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 underclause (b) or clause (c) or clause (f) of sub-section (1) of section 6 and appoint in his place anotherperson to fill the vacancy;

(iii) the shareholders, other than the Central Government, may, by a resolution passed bymajority, of the votes of such shareholders holding in the aggregate not less than one-half of the sharecapital 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 hasbeen given an opportunity of showing cause against such removal.

(2) Notwithstanding anything contained in sub-section (1), the Central Government shall, inconsultation 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 theexpiry of the term prescribed under sub-section (5) of section 9, by giving notice of not less than threemonths in writing or three months' salary and allowances in lieu of such notice.

(1) If a director--

(a) becomes subject to any of the disqualifications mentioned in section 10 or is removed undersection 11; or

(b) is absent without leave of the Board for three or more consecutive meetings thereof, his seatshall thereupon become vacant.

(2) Any director may resign his office by giving notice thereof in writing to the Board and on suchresignation being accepted by the Board, or, if such resignation is not accepted sooner, on the expiry ofthree months from the receipt thereof by the Board, such director shall be deemed to have vacated hisoffice.

(1) The Board shall meet at such times and places and shall observe suchrules of procedure in regard to the transaction of business at its meetings, as may be specified byregulations.

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

(3) The Chairperson of the Board, or, if for any reason he is unable to attend any meeting, theManaging Director, or, in the event of both the Chairperson and the Managing Director being unable toattend a meeting, any other director nominated by the Chairperson in this behalf and in the absence ofsuch 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 ofvotes of the directors present and voting, and in the event of an equality of votes, the Chairperson, or, inhis 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.

(1) No act or proceeding of the Board or ofany of its committee shall be questioned on the ground merely of the existence of any vacancy in, ordefect 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 itscommittee shall become invalid merely on the ground that he was disqualified to be a director or thatthere was any other defect in his appointment.

(1) The Board shall constitute a Nomination and RemunerationCommittee, a Risk Management Committee and an Audit Committee, each consisting of a minimum ofthree directors with independent directors forming a majority.

(2) The Board shall constitute an Executive Committee consisting of such number of directors as itmay consider necessary.

(3) The Chairperson of the Institution shall not be a member of the Executive Committee and after thefirst 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 atsuch times and places, observe such rules of procedure in regard to transaction of business at its meetingsand shall perform such functions, as may be specified by regulations.

(1) Every director shall at thefirst meeting of the Board in which he participates as a director and thereafter at the first meeting of theBoard in every financial year, or whenever there is any change in the disclosures already made, then at thefirst Board meeting held after such change, disclose his concern or interest in any body corporate, whichshall 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 acontract or arrangement or proposed contract or arrangement entered into or to be entered into by theInstitution--

(a) with a body corporate in which such director or such director in association with any otherdirector, 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 casemay be,

shall not participate in any meeting of the Board or of its committee in which such contract orarrangement is deliberated upon, or in any other deliberations or discussions regarding such contract orarrangement, 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 intosuch contract or arrangement, shall, if he becomes concerned or interested after the contract orarrangement is entered into, disclose his concern or interest forthwith when he becomes concerned orinterested, 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 orindirectly, 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 Institutionshall make disclosures to the Board relating to all material, financial and commercial transactions, inwhich they have personal interest that may have a potential conflict with the interest of the Institution, andthe Board shall formulate a policy on such transactions, including any materiality threshold therefor, andshall 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 sharesof the Institution or any of its subsidiaries or associate companies, commercial dealings with bodies inwhich 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 employeeshall 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 toproceed against a director or any other employee who had entered into such contract or arrangement incontravention of the provisions of this section for recovery of any loss sustained by it as a result of suchcontract or arrangement.

Explanation.--For the purposes of this section and section 19, the expression "body corporate" shallinclude 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 orconstituted by or under any Central Act or State Act, and any other incorporated association of persons orbody of individuals.

(1) The Institution shall perform the following functionsand exercise the following powers, namely:--

(i) form subsidiaries or joint ventures or branches, in India or outside India, for carrying out itsfunctions; and enter into any arrangement with such subsidiary company or joint venture or branchincluding for financing any such subsidiary company or joint venture or branch or guaranteeing any oftheir 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 ofinfrastructure finance and maintain expert staff to study problems relating to infrastructure finance andbe available for consultation to the Central Government, the Reserve Bank and the other institutionsengaged in the field of infrastructure finance;

(iii) set up trusts under the Indian Trusts Act, 1882 (2 of 1882) for establishment of funds for suchnature as would assist in financing of infrastructure projects located in India, or partly in India andpartly 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 forinfrastructure financing including facilitating electronic and negotiated markets infrastructure, investorprotection, adjudication infrastructure, etc.;

(v) lend and invest in infrastructure projects located in India, or partly in India and partly outsideIndia, including by underwriting credit, securitisation of its receivables, including by way of any passthrough certificate or direct assignment, transfer or novation, or by means of innovative financial toolsincluding transactions secured by receivables from project;

(vi) extend loans and advances to any company or statutory corporation or trust or any financialinstitution funding infrastructure, for the purposes of providing financial assistance for infrastructureprojects 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 locatedin India, or partly in India and partly outside India;

(viii) transfer loans and advances granted by it, with or without the securities, to trusts, forconsideration;

(ix) set aside loans or advances held by the Institution and issue and sell securities based uponsuch loans or advances so set aside in the form of debt obligations, trust certificates of beneficialinterest or other instruments, by whatever name called, and act as a trustee for the holders of suchsecurities;

(x) assign securities issued to the Institution;

(xi) subscribe to or purchase, underwrite, acquire, hold or sell stocks, shares, bonds, debenturestocks, 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 societyor association or the Central Government or any State Government or any financial institutionfunding infrastructure, to facilitate financing of infrastructure projects in India, or partly in India andpartly 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 orsecure 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 eitherredeemable or otherwise and charge or secure the same by trust deed, or otherwise on the undertakingof 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, mutualfunds, any class of persons, and from any other institution or authority or organisation notified by theCentral Government, on such terms and conditions as may be agreed upon and accept short termloans 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 thedischarge of its functions;

(xv) issue participation certificates or debt securities, and promote and facilitate securitisation ofloan portfolio of companies and other entities engaged in the development and financing ofinfrastructure and create and develop a secondary market for the securitised receivables including byway of acting as an intermediary;

(xvi) lend money with or without security and make advances upon, hold in trust, issue, buy, sellor otherwise acquire or dispose of on commission or otherwise any of the securities or investments oract as an agent for any of the like purpose;

(xvii) lend to or invest in or acquire professional or technical services of companies operating inthe infrastructure domain across the life cycle of projects;

(xviii) act as an intermediary in respect of transactions or services relating to debt securitiesissued by infrastructure companies and financial institutions for financing infrastructure projectslocated in India, or partly in India and partly outside India, including by way of extension of creditenhancement facilities;

(xix) take an active role in negotiations and discussions with various Government authorities andstakeholders 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, JapanInternational Cooperation Agency, United States Agency for International Development,Kreditanstalt für Wiederaufbau, European Investment Bank, Asian Development Bank, InternationalFinance Corporation and other organisations and agencies, and organise and facilitate foreignparticipation 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, orpartly in India and partly outside India;

(xxii) borrow money from the Reserve Bank repayable on demand or on the expiry of fixedperiods not exceeding ninety days from the date on which the money is so borrowed against thesecurity of stocks, funds or securities (other than immovable property) in which a trustee is authorisedto 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 notesarising out of bona fide commercial or trade transactions maturing within five years from the date ofthe 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 CentralGovernment 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 jointventures or in association with others, may carry out the following functions, namely:--

(a) organise and facilitate participation from the Central Government, public sector, private sectorand institutional investors from India or overseas in infrastructure development projects located inIndia, or partly in India and partly outside India;

(b) provide facilities for training, for dissemination of information and the promotion of researchincluding the undertaking of studies, researches, techno-economic and other surveys in the field ofinfrastructure development and it may for the said purposes make loans or advances or grantsincluding grants by way of provision for fellowships and chairs to any institution;

(c) provide technical, legal, marketing and administrative assistance to any person engaged ininfrastructure 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 outsideIndia;

(e) act as trustees of any deeds constituting or securing any debentures, debenture stocks, or othersecurities or obligation and undertake and execute any other trusts, and also undertake the office of orexercise the powers of executor, administrator, receiver, treasurer, custodian and trust corporation;

(f) acquire an undertaking including the business, assets and liabilities of any institution theprincipal object of which is the promotion or development of infrastructure financing for projectslocated in India, or partly in India and partly outside India;

(g) act as a financial intermediary for the purpose of promotion, financing and development ofinfrastructure projects and facilities located in India, or partly in India and partly outside India,through developing and disseminating appropriate financial instruments, negotiating loans andadvances of all nature, and formulating schemes for mobilisation of resources;

(h) structure proposals and negotiate agreements, with the proponents of infrastructure projectsand with investors in infrastructure projects located in India, or partly in India and partly outsideIndia;

(i) open any account in any bank in or outside India or make any agency arrangement with, or actas 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 itspowers 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 thebonds, debentures and loans issued by the Institution as to the repayment of principal and the payment ofinterest at such rate, terms and conditions as may be agreed by the Central Government.

(1) The Institution shall not make any loan or advance on the security ofits own bonds or debentures.

(2) The Institution shall not make loans or advances to any person or body of persons of which any ofthe directors of the Institution is a proprietor, partner, director, employee or guarantor, or in which one ormore 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 bythe Institution or the Central Government as director on the Board of such borrower or is elected on theBoard of such borrower by virtue of shares held in the borrower by the Institution.

Explanation.-- For the purpose of this section, u201csubstantial interestu201d in relation to a borrower, meansthe beneficial interest held by one or more of the directors of the Institution or by any relative of suchdirector as defined in clause (77) of section 2 of the Companies Act, 2013 (18 of 2013) whether singly ortaken together, in the shares of the borrower, and the aggregate amount paid-up on which either exceedsfifty lakhs rupees or two per cent. of the paid-up share capital of the borrower, whichever is lesser or suchother threshold as may be prescribed.

(1) Except with the consent of the Board and subject to suchconditions as may be prescribed, the Institution shall not enter into any contract or arrangement with arelated 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;

(f) such related party's appointment to any office or place of profit in the Institution, itssubsidiaries 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 bespecified by regulations, shall be entered into except with the prior approval in the general meeting of theshareholders:

Provided further that no shareholder shall vote in such general meeting to approve any contract orarrangement 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 theInstitution in its ordinary course of business, other than transactions which are not on an arm's lengthbasis:

Provided also that the requirement of approval under the first proviso shall not be applicable fortransactions entered into between the Institution and its wholly owned subsidiary, if any, whose financialstatements are consolidated with the Institution and placed before the shareholders at the general meetingfor 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 theInstitution anything by way of remuneration over and above the remuneration to which he is entitledas director, by way of salary, fee, commission, perquisites, any rent-free accommodation, orotherwise;

(ii) where such office or place is held by an individual other than a director or by any firm, privatecompany or other body corporate, if the individual, firm, private company or body corporate holdingit 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 thatis 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 reportmade by the Board to the shareholders, along with the justification for entering into such contract orarrangement.

(3) Where any contract or arrangement is entered into by a director or any employee, withoutobtaining the consent of the Board or approval by a resolution in the general meeting of the shareholdersunder sub-section (1) and if it is not ratified by the Board or, as the case may be, by the shareholders at ameeting within three months from the date on which such contract or arrangement was entered into, suchcontract or arrangement shall be voidable at the option of the Board or, as the case may be, of theshareholders and if the contract or arrangement is with a related party to any director, or is authorised byany 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 toproceed against a director or any other employee who had entered into such contract or arrangement incontravention of the provisions of this section for recovery of any loss sustained by it as a result of suchcontract or arrangement.

(5) Any director or employee of the Institution who had entered into or authorised a contract orarrangement in violation of the provisions of this section, shall be liable to pay penalty of a sum of up totwenty-five lakh rupees.

(1) The performance of the Institution shall, once in everyfive 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 withrespect to the purpose and objectives of the Institution as set out in section 4 and shall take into accountsuch 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 copythereof along with action taken, if any, pursuant to such report to the Central Government within a periodof three months from the date of receipt of the report.

(1) The Central Government may support the Institution throughgrants 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 ofthe first financial year from the establishment of Institution, grant or contribute an amount of fivethousand crore rupees to the Institution in the form of cash or marketable Government securities.

The Government shall prescribe a concessionalrate of fees, not exceeding 0.1 per cent. at which Government guarantee may be extended to theInstitution for borrowings from mu

Hedging costs in connection with any borrowing of foreign currency by theInstitution for the purposes of granting loans and advances or its repayment, to insulate the Institutionfrom any fluctuations in the rates of exchange, may be reimbursed by the Central Government in part orin full.

(1) The Institution shall establisha reserve fund to which may be transferred such sums as the Board may deem fit out of the annual profitsaccruing 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 othermatters for which provision is necessary or expedient or which is usually provided for by bankers and forthe reserve fund referred to in sub-section (1), and after transferring a part of the profit to such otherreserves or funds as may be considered appropriate, the Board may out of its net profits propose adividend.

(1) The balance-sheet and accounts of theInstitution 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 onthe 31st day of March each year or such other date as the Board may determine.

(1) The accounts of the Institution shall be audited by auditors duly qualified to act asauditors under sub-section (1) of section 141 of the Companies Act, 2013 (18 of 2013), who shall beappointed by the Institution in general meeting of the shareholders out of the panel of auditors approvedby 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 itshall be their duty to examine it together with the accounts and vouchers relating thereto and they shallhave a list delivered to them of all books kept by the Institution and shall at all reasonable times haveaccess 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 otheremployee of the Institution and shall be entitled to require from the Board or officers or other employeesof the Institution such information and explanation as they may think necessary for the performance oftheir duties.

(4) The auditors shall make a report to the Institution upon the annual balance-sheet and accountsexamined by them and in every such report they shall state whether in their opinion the balance-sheet is afull and fair balance-sheet containing all necessary particulars and properly drawn up so as to exhibit atrue and fair view of the state of affairs of the Institution and in case they had called for any explanationor information from the Board or any officer or other employee of the Institution, whether it has beengiven and whether it is satisfactory.

(5) The Institution shall furnish to the Central Government and the Reserve Bank within four monthsfrom the date on which its accounts are closed and balanced, a copy of its balance-sheet and accountstogether with a copy of the auditor's report and a report of the working of the Institution during therelevant year, and the Central Government shall, as soon as may be after they are received by it, cause thesame to be laid before each House of Parliament.

The Institution shall furnish, from time to time, to the Central Governmentand to the Reserve Bank, such returns as the Central Government or the Reserve Bank may require.

(1) Any sums received by a financial institution for refinancingfrom 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 andshall accordingly be paid by such financial institution to the Institution.

(2) Where any accommodation has been granted by the Institution to a financial institution, allsecurities held, or which may be held, by such financial institution on account of any transaction inrespect of which such accommodation has been granted, shall be held by such financial institution in trustfor the Institution.

(1) Any person who intends to set up adevelopment financial institution, in addition to the Institution established under this Act, shall make anapplication to the Reserve Bank for licence.

(2) The Reserve Bank may in consultation with the Central Government, grant licence subject to suchcriteria, 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 provisionsof the Reserve Bank of India Act, 1934 (2 of 1934) or the Banking Regulation Act, 1949 (10 of 1949), asthe case may be.

(4) The regulations made by the Reserve Bank shall apply to the Institution established under this Actto such extent as are not inconsistent with the provisions of this Act.

(1) The Institution may appoint such number of officers and otheremployees as it considers necessary or desirable for the efficient performance of its functions anddetermine the terms and conditions of their appointment of service.

(2) The duties and conduct, terms and other conditions of service including their salaries andallowances and the establishment and maintenance of provident fund or any other fund for the benefit ofthe officers and other employees of the Institution appointed under sub-section (1) shall be such as maybe specified by regulations:

Provided that the salaries and allowances payable to the officers and employees shall be determinedby 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 suchterms and conditions as it may determine, to any other institution including an infrastructure finance ordevelopment institution.

(4) The Institution may receive or take on deputation any officer or other employee from anyinstitution including an infrastructure finance or development institution, for such period and on suchterms and conditions as may be specified by regulations.

(5) Nothing contained in this section shall empower the Institution to depute any officer or member ofits staff to any institution on any salary, emoluments or other terms and conditions which is or are lessfavourable to him than that or those to which he is entitled to immediately before such deputation.

(1) The Central Government may, bynotification, 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 mayprovide 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) ofsection 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 theterm 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 anyrelative 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 undersub-section (1) of section 19;

(h) the parameters on the basis of which the external agency shall review the performance of theInstitution 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 beprepared under sub-section (1) of section 25;

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

(1) The Board may, with the previous approval of theCentral Government and in consultation with the Reserve Bank, by notification, make regulations notinconsistent with the provisions of this Act to provide for all matters for which provision is necessary orexpedient 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 mayprovide for all or any of the following matters, namely:--

(a) the salaries and allowances payable to the Managing Director and Deputy Managing Directorsunder sub-section (4) of section 9;

(b) the times, places and rules of procedure in regard to the transaction of business of the Boardunder sub-section (1) of section 13;

(c) the times, places and rules of procedure in regard to the transaction of business of thecommittees 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 undersub-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 penaltiesspecified 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.

Every rule and every regulation madeunder this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while itis in session, for a total period of thirty days which may be comprised in one session or in two or moresuccessive sessions, and if, before the expiry of the session immediately following the session or thesuccessive sessions aforesaid, both Houses agree in making any modification in the rule or regulation orboth Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafterhave effect only in such modified form or be of no effect, as the case may be; so, however, that any suchmodification or annulment shall be without prejudice to the validity of anything previously done underthat rule or regulation.

No suit, prosecution or other legal proceedings shalllie against the Institution or its Chairperson or other directors, employees or officers for anything which isdone 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.

(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 investigationinto any offence alleged to have been committed under any law, in relation to any recommendation madeor decision taken by the Chairperson or other directors, employees or officers of the Institution indischarge 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 theChairperson or other directors; or

(b) the Managing Director, where the offence is alleged to have been committed by an employeeor officer of the Institution:

Provided that no such approval shall be necessary for cases involving arrest of a person on the spot onthe 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, shallconvey its decision within a period of three months, and such period may, for reasons to be recorded inwriting by the Central Government or the Managing Director, as the case may be, be extended by afurther period of one month:

Provided also that failure of the Central Government or the Managing Director to convey its decisionunder this sub-section within the time specified under the second proviso shall not be considered asdeemed approval for initiation of any enquiry or inquiry or investigation.

Explanation.--For the purposes of this sub-section, the expression "undue advantage" shall have themeaning 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 beencommitted by the Chairperson or other directors, employees or officers of the Institution for which asanction to conduct any enquiry or inquiry or investigation was granted under sub-section (1), except withthe previous sanction of--

(a) the Central Government, where the offence is alleged to be committed by the Chairperson orother directors; or

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

Provided that the Central Government or the Managing Director shall, after the receipt of the proposalrequiring sanction for prosecution under this sub-section, endeavour to convey the decision on suchproposal 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, legalconsultation is required, such period may, for the reasons to be recorded in writing, be extended by afurther period of one month:

Provided also that failure of the Central Government or the Managing Director to convey its decisionunder this sub-section within the time specified shall not be considered as deemed approval for theinitiation of prosecution.

(1) Where any arrangement entered intoby the Institution with a borrowing entity while granting loans and advances provides for the appointmentor nomination by the Institution of one or more directors of such entity, such provision and anyappointment 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 beingin 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 officeof directors and such like conditions contained in any such law or instrument aforesaid, shall not apply toany 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 thepurpose of immunities available to independent directors;

(b) hold office during the pleasure of the Institution and may be removed or substituted by anyperson 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 doneor omitted to be done in good faith in the discharge of his duties as a director or anything in relationthereto;

(d) not be liable to retirement by rotation and shall not be taken into account for computing thenumber of directors liable to such retirement.

(1) Notwithstanding anything to thecontrary contained in any other law for the time being in force, the validity of any loan or advance grantedby the Institution in pursuance of the provisions of this Act shall not be called in question merely on theground 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 theinstrument relating to the constitution of such company does not empower such company to do so.

(1) The Institution shall not, except as otherwiserequired by this Act or by any other law, divulge any information relating to, or to the affairs of, itsconstituents except in circumstances in which it is, in accordance with the law or practice and usagecustomary 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 ofthe 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 FirstSchedule.

(1) The Board shall make regulations for setting up a mechanism for the purposeof determining the penalties specified under sub-section (5) of section 16 and sub-section (5) of section19.

(2) The regulations shall provide for a reasonable opportunity of being heard to the director or anemployee against whom a complaint is made for violating the provisions of section 16 or section 19, asthe case may be, and a right to prefer an appeal against any order imposing the penalty.

(1) Every director shall be indemnified by the Institution against alllosses and expenses incurred by him in, or in relation to, the discharge of his duties, except such as arecaused 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 ofthe Institution or for any loss or expenses resulting to the Institution from the insufficiency or deficiencyof the value of, or title to, any property or security acquired or taken on behalf of the Institution or theinsolvency or wrongful act of any debtor or any person under obligation to the Institution or anythingdone in good faith in the execution of the duties of his office or in relation thereto.

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

The provisions of sections 34A and 36AD of the Banking Regulation Act, 1949 (10 of1949) shall apply to the Institution.

No provision of law relating to the winding up of companies shallapply to the Institution and the Institution shall not be placed in liquidation save by order of the CentralGovernment and in such manner as it may direct.

Without prejudice to the foregoingprovisions of this Act, the Institution shall, in the performance of its functions under this Act, be bound bysuch directions on questions of policy as the Central Government may give in writing to it from time totime.

The provisions of this Act shall have effect, notwithstandinganything inconsistent therewith contained in any other law for the time being in force or any instrumenthaving effect by virtue of any such law.

(1) If any difficulty arises in giving effect to the provisions ofthis Act, the Central Government may, by order, published in the Official Gazette, make such provisionsor give such directions not inconsistent with the provisions of this Act, as appears to it to be necessary orexpedient for removing the difficulty:

Provided that no such order shall be made after the expiry of three years from the date ofcommencement of this Act.

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

The Reserve Bank of India Act, 1934 shall be amended in themanner specified in the Second Schedule.

The Banking Regulation Act, 1949 shall be amended in themanner specified in the Third Schedule.