Opposition says National Bank for Financing Infrastructure and Development Bill 'lacks' oversight

Several opposition MPs in the Rajya Sabha on Thursday demanded that the National Bank for Financing Infrastructure and Development Bill be sent to a select committee as it lacked adequate provisions for accountability and oversight.
The bill was, however, passed by voice vote in the Upper House. The Lok Sabha had already passed the bill on March 23, 2021.

Initiating the debate on the bill, Senior Congress MP Jairam Ramesh questioned the logic of keeping the proposed development finance institution out of the purview of CBI, CVC, and even CAG.

Jharna Das Baidya of the CPI (M) demanded that the government set out a structural financial mechanism for this, as such institutions like ICICI, IDBI and IFCI were set up earlier as well. She said the current bill does not have adequate provisions for accountability to the stakeholders and the public at large.

Narain Das Gupta (AAP) said the bill should be sent to a Select Committee. He pointed out that there are no provisions of accountability or oversight and asked why a new bank was being created when similar institutions have "failed in the past".

Finance Minister Nirmala Sitharaman later said the government can ask for audit reports and whenever it deems fit and these reports will be tabled in Parliament too. "This is not beyond oversight. Parliament will get reports on the bank every year," she said.

Ramesh outlined the long history of development financial institutions in the country, and talked about IDBI, ICICI, and NABARD, among others.

Terming the bill as "very ambitious", he said NaBFID would be a government company and huge resources are going to be mobilised, and yet there is no external oversight, external surveillance, or external monitoring.

He said the proposed legislation empowers the government to extend sovereign guarantee in the case of a default.

"No CBI, no CVC, no CAG. I can understand CBI and CVC, but why no CAG...this is the most undesirable state of affairs," Ramesh said and added that the Comptroller General of Accounts (CGA) is a constitutional body.

He also rued that the bill was not sent to a Standing Committee of Parliament for scrutiny.

"I request the honourable finance minister to revisit the fundamental assumption of this bill, which is no external oversight, no investigating agency, no audit, no external surveillance, and we believe in act of good faith, who will determine good faith is completely left unanswered," he said.

Ramesh further said that there is a belief in the Modi government that infrastructure can be built with foreign capital.

"Economic history shows foreign capital has never built infrastructure in any other country. Indian infrastructure will be built with Indian capital," he said and added that foreign capital will have an important role to play.

"You have to stimulate domestic savings, and not have this dangerous dependence on foreign funds," he said.

The former union minister also highlighted that India's biggest problem is the lack of a deep and liquid corporate bond market. He said unless the country develops a broad based liquid bond market, "we are not going to be able to get the pool of domestic savings into infrastructure".

The government intends to bring down its stake in NaBFID from 100 per cent to 26 per cent once the institution stabilises. The government will provide Rs 5,000 crore as grant and Rs 20,000 crore equity capital. This government-owned development finance institution will help fund about 7,000 infra projects under the National Infrastructure Pipeline (NIP).

The legislation will give effect to the Budget announcement made by the finance minister on February 1. The government has proposed Rs 20,000 crore to capitalise the institution.

Sayed Zafar Islam of the BJP said creation of such an institution was a long pending demand of the financial market. He said the financial market will be extremely as the bill embodies all the relevant aspects.

Opposition parties such as BJD, TRS, YSRCP supported the bill and sought some controls on the proposed institutions.

Samajwadi Party leader Vishambhar Prasad Nishad demanded that the bill be sent to a select committee as the proposed DFI to be set up via the bill cannot be probed by agencies like CAG, CBI or Parliament's Public Accounts Committee (PAC). He said at a time when the government was selling out PSUs, it is setting up another PSU.

Subhas Chandra Bose Pilli (YSRCP) said the bill is necessary as currently funding long term infrastructure projects has become a big challenge.

He supported the bill but sought clarification if the proposed DFI will cover social infrastructure projects like education and health. He also sought to know if it will also fund the infrastructure projects mandated under the 15th schedule of the Andhra Pradesh Reorganization Act.

Sujeet Kumar (BJD) and Banda Prakash (TRS) said setting up of new DFI is not a difficult task, but a big challenge will emerge once it is established.

There should be some controls on such institutions, Prakash added.

Nominated member Narendra Jhadav said he wholeheartedly supported the bill and noted that the main challenge post-COVID-19 was to pull up the economy from its depths.

K Ravindra Kumar (TDP) said the intention behind the bill is good, so is the idea of a sovereign guarantee.

Satish Chandra Mishra (BSP) commended the bill and sought to know what will be the quantum of foreign funds in the bank.