The Centre appointed veteran banker KV Kamath as chairperson of the National Bank for Financing Infrastructure and Development, a development financial institution that’s being set up.
In his last role, Kamath served as president of the Shanghai-based New Development Bank founded by the BRICS nations in 2014. He’s been chairman of ICICI Bank and Infosys and is a recipient of the Padma Bhushan.
“The central government has appointed KV Kamath to the post of chairperson, National Bank for Financing Infrastructure and Development, a newly set up DFI in India,” the Department of Financial Services, part of the finance ministry, said in a tweet on Wednesday.
NaBFID will be set up with a corpus of ₹20,000 crore and an initial grant of ₹5,000 crore from the government. Earlier this year, Parliament approved its establishment to support the development of long-term non-recourse infrastructure financing in India, including development of the bonds and derivatives markets necessary for infrastructure financing. The government’s stake will not go below 26% in the proposed state-owned entity, which will be headquartered in Mumbai.
The institution seeks to address market failures that stem from the long-term, low-margin and risky nature of infrastructure financing, the government has stated. Longterm infrastructure financing has been a fundamental source of asset-liability mismatch on the balance sheets of the banks, raising systemic concerns.
This DFI will help fund about 7,000 infrastructure projects in the National Infrastructure Pipeline, which envisages an investment of ₹111 lakh crore by 2024-25. The DFI will enjoy a 10-year tax concession so that it can provide long-term funds at affordable cost to the infrastructure sector.