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- The Rajya Sabha recently cleared the legislation to establish the National Bank for Financing Infrastructure and Development (NBFID), which was announced in the Budget speech by Finance Minister as the principal development financial institution (DFIs) for infrastructure financing.
- Opposition members argued unsuccessfully for sending the Bill to a select committee, saying that in its present form, there was no scope for “external oversight or surveillance”.
- Finance Minister, however, said all safeguards had been provided for and an audited report would be placed in Parliament every year.
Opposition:
- Opposition leader Jairam Ramesh opened the debate, saying the concept of DFIs had already been tried, tested and rejected.
- The first such institution was set up in 1948. In 1991, Manmohan Singh, as Finance Minister, had set up the Narsimham committee, which came to the conclusion that the era of the DFIs was over.
- Thirty years after Dr. Manmohan Singh’s Budget, the clock has turned back and we are going back to the DFI era.
- He said that despite the government having a 26% stake in this bank, the Bill did not provide for an oversight mechanism.
- The other lacuna was the protection provided to management for the decisions it takes as an “act of good faith”. “What is an act of good faith? Who will determine an act of good faith?
Safeguards:
- Finance Minister said the NBFID was the need of the hour and the need of the next 25 years.
- The infrastructure that it planned to fund was not only roads but also social infrastructure like schools and hospitals.
- It would be a professionally run body, with only the government appointing the Chairperson.
- The Bill had safeguards, including the provision that the NBFID had to furnish to the Centre and the RBI a copy of its balance-sheet and accounts.
SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT
