RBI Deputy Governor asks NaBFID to develop sustainable business model, not dependent on govt support
NaBFID must particularly look to strengthening the risk management and establishment of robust assurance systems from the outset
Detail
RBI Deputy Governor M Rajeshwar Rao has asked the National Bank for Financing Infrastructure and Development (NaBFID) to develop a sustainable business model not dependent on government support. He said such a self-sustainable model has to evolve over the medium term, which also doesn't depend on regulatory dispensations as well. He said it is also necessary that over the medium-term, plans for self-sustainable operations, under a business model that is not reliant on continuous government support, or regulatory dispensations would need to be in place. He added ‘the dynamic nature of our times necessitates agile strategies for institutions with a focus on sectors prioritised by the government’.
Rao stated that there is need for higher private sector play when it comes to infrastructure investments, pointing out that in the past, the government has played an important role. NaBFID can play a transformative role as a catalyst to get the private sector investments. As NaBFID is still in its formative phase, the focus must be on equipping itself with the necessary resources, skills and knowledge through concerted efforts on human capital development, institution strengthening, and adoption of best practices.
He noted that NaBFID must particularly look to strengthening the risk management and establishment of robust assurance systems from the outset, fostering a sound risk culture going forward. The entity also needs to quickly develop project appraisal expertise and establish itself as a leader, setting benchmarks in the market for its project selection, appraisal and monitoring to give comfort to lenders and stakeholders.