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Question

With reference to the National Bank for Financing Infrastructure and Development (NBFID), consider the following statements:

Select the correct answer using the codes given below:


A

1 and 2 only

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B

1 and 3 only

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C

1 and 4 only

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D
1, 2, 3 and 4
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Solution

The correct option is C

1 and 4 only


Statement 1 is correct: The National Bank for Financing Infrastructure and Development (NBFID) is the principal development financial institution (DFIs) for infrastructure financing. DFIs are set up for providing long-term finance for such segments of the economy where the risks involved are beyond the acceptable limits of commercial banks and other ordinary financial institutions.

Statement 2 is incorrect: Unlike banks, DFIs do not accept deposits from people. They source funds from the market, government, as well as multilateral institutions, and are often supported through government guarantees.

Statement 3 is incorrect: Initially, the central government will own 100% shares of the institution which may subsequently be reduced up to 26%.

Statement 4 is correct: NBFID may borrow money from:

  • (i) central government,

  • (ii) Reserve Bank of India (RBI),

  • (iii) scheduled commercial banks,

  • (iv) mutual funds, and

  • (v) multilateral institutions such as the World Bank and Asian Development Bank.


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