17. Functions and powers of Institution.—(1) The Institution shall perform the following functions
and exercise the following powers, namely:—
(i) form subsidiaries or joint ventures or branches, in India or outside India, for carrying out its
functions; and enter into any arrangement with such subsidiary company or joint venture or branch
including for financing any such subsidiary company or joint venture or branch or guaranteeing any of
their liabilities or make any other arrangement which may seem desirable to the Board;
(ii) co-ordinate its operations and the operations of various institutions engaged in the field of
infrastructure finance and maintain expert staff to study problems relating to infrastructure finance and
be available for consultation to the Central Government, the Reserve Bank and the other institutions
engaged in the field of infrastructure finance;
(iii) set up trusts under the Indian Trusts Act, 1882 (2 of 1882) for establishment of funds for such
nature as would assist in financing of infrastructure projects located in India, or partly in India and partly
outside India, including real estate investment trusts and infrastructure investment trusts;
(iv) support the development of a deep and liquid market for bonds, loans and derivatives for
infrastructure financing including facilitating electronic and negotiated markets infrastructure, investor
protection, adjudication infrastructure, etc.;
(v) lend and invest in infrastructure projects located in India, or partly in India and partly outside
India, including by underwriting credit, securitisation of its receivables, including by way of any pass
through certificate or direct assignment, transfer or novation, or by means of innovative financial tools
including transactions secured by receivables from project;
(vi) extend loans and advances to any company or statutory corporation or trust or any financial
institution funding infrastructure, for the purposes of providing financial assistance for infrastructure
projects located in India, or partly in India and partly outside India;
(vii) take over or refinance existing loans extended by a lender for infrastructure projects located in
India, or partly in India and partly outside India;
(viii) transfer loans and advances granted by it, with or without the securities, to trusts, for
consideration;
(ix) set aside loans or advances held by the Institution and issue and sell securities based upon such
loans or advances so set aside in the form of debt obligations, trust certificates of beneficial interest or
other instruments, by whatever name called, and act as a trustee for the holders of such securities;
(x) assign securities issued to the Institution;
(xi) subscribe to or purchase, underwrite, acquire, hold or sell stocks, shares, bonds, debenture
stocks, debt securities, obligations and securities, commercial papers, certificates of deposit or
debentures issued or guaranteed by any company or trust or registered society or co-operative society
or association or the Central Government or any State Government or any financial institution funding
infrastructure, to facilitate financing of infrastructure projects in India, or partly in India and partly
outside India, or to facilitate deepening of bond market for infrastructure financing;
(xii) borrow or raise money by way of loans or otherwise both in rupees and foreign currencies or
secure the payment of money by the issue and sale of debentures, debenture stocks, bonds, obligations,
mortgages and securities of all kinds, either perpetual or terminable and either redeemable or otherwise
and charge or secure the same by trust deed, or otherwise on the undertaking of the Institution including
its authorised or issued capital, or upon any specific property and rights, present or future, of the
Institution or otherwise, howsoever;
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(xiii) borrow money from the Central Government, scheduled banks, financial institutions, mutual
funds, any class of persons, and from any other institution or authority or organisation notified by the
Central Government, on such terms and conditions as may be agreed upon and accept short term loans
only for managing asset liability mismatches and not for any other business purpose;
(xiv) buy or sell, or enter into such other dealings in foreign exchange as may be necessary for the
discharge of its functions;
(xv) issue participation certificates or debt securities, and promote and facilitate securitisation of
loan portfolio of companies and other entities engaged in the development and financing of
infrastructure and create and develop a secondary market for the securitised receivables including by
way of acting as an intermediary;
(xvi) lend money with or without security and make advances upon, hold in trust, issue, buy, sell
or otherwise acquire or dispose of on commission or otherwise any of the securities or investments or
act as an agent for any of the like purpose;
(xvii) lend to or invest in or acquire professional or technical services of companies operating in
the infrastructure domain across the life cycle of projects;
(xviii) act as an intermediary in respect of transactions or services relating to debt securities issued
by infrastructure companies and financial institutions for financing infrastructure projects located in
India, or partly in India and partly outside India, including by way of extension of credit enhancement
facilities;
(xix) take an active role in negotiations and discussions with various Government authorities and
stakeholders for effective dispute resolution in the field of infrastructure financing;
(xx) apply for, receive, accept, administer and manage grants, aids, subsidies, funds or donations,
etc., from national and international sources including World Bank, New Development Bank, Japan
International Cooperation Agency, United States Agency for International Development, Kreditanstalt
für Wiederaufbau, European Investment Bank, Asian Development Bank, International Finance
Corporation and other organisations and agencies, and organise and facilitate foreign participation in
infrastructure development projects;
(xxi) issue guarantee, letters of comfort, or letters of credit for loans or credit arrangements made,
or, debentures or bonds issued, by any financial institution funding infrastructure projects in India, or
partly in India and partly outside India;
(xxii) borrow money from the Reserve Bank repayable on demand or on the expiry of fixed periods
not exceeding ninety days from the date on which the money is so borrowed against the security of
stocks, funds or securities (other than immovable property) in which a trustee is authorised to invest
trust money by any law for the time being in force in India;
(xxiii) borrow money from the Reserve Bank against bills of exchange or promissory notes arising
out of bona fide commercial or trade transactions maturing within five years from the date of the
borrowing;
(xxiv) convert any debt it has extended to a borrower into equity; and
(xxv) any other kind of business or undertake any other kind of activity which the Central
Government in consultation with the Reserve Bank may authorise.
(2) In furtherance of sub-section (1), the Institution, either by itself or through its subsidiaries or joint
ventures or in association with others, may carry out the following functions, namely:—
(a) organise and facilitate participation from the Central Government, public sector, private sector
and institutional investors from India or overseas in infrastructure development projects located in
India, or partly in India and partly outside India;
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(b) provide facilities for training, for dissemination of information and the promotion of research
including the undertaking of studies, researches, techno-economic and other surveys in the field of
infrastructure development and it may for the said purposes make loans or advances or grants including
grants by way of provision for fellowships and chairs to any institution;
(c) provide technical, legal, marketing and administrative assistance to any person engaged in
infrastructure development activities;
(d) provide consultancy services in the field of infrastructure development, project structuring,
capital structuring or operations subsequent to commissioning and other related matters in or outside
India;
(e) act as trustees of any deeds constituting or securing any debentures, debenture stocks, or other
securities or obligation and undertake and execute any other trusts, and also undertake the office of or
exercise the powers of executor, administrator, receiver, treasurer, custodian and trust corporation;
(f) acquire an undertaking including the business, assets and liabilities of any institution the
principal object of which is the promotion or development of infrastructure financing for projects
located in India, or partly in India and partly outside India;
(g) act as a financial intermediary for the purpose of promotion, financing and development of
infrastructure projects and facilities located in India, or partly in India and partly outside India, through
developing and disseminating appropriate financial instruments, negotiating loans and advances of all
nature, and formulating schemes for mobilisation of resources;
(h) structure proposals and negotiate agreements, with the proponents of infrastructure projects and
with investors in infrastructure projects located in India, or partly in India and partly outside India;
(i) open any account in any bank in or outside India or make any agency arrangement with, or act
as an agent or correspondent of, any bank or other institution in or outside India; and
(j) do such other acts and things as may be incidental to, or consequential upon, the exercise of its
powers or the discharge of its duties under this Act or any other law for the time being in force, including
sale or transfer of any of its assets.
(3) The Central Government may, on a request being made to it by the Institution, guarantee the bonds,
debentures and loans issued by the Institution as to the repayment of principal and the payment of interest
at such rate, terms and conditions as may be agreed by the Central Government.
18. Prohibited business. —(1) The Institution shall not make any loan or advance on the security of
its own bonds or debentures.
(2) The Institution shall not make loans or advances to any person or body of persons of which any of
the directors of the Institution is a proprietor, partner, director, employee or guarantor, or in which one or
more directors of the Institution hold substantial interest.
(3) Sub-section (2) shall not apply to any borrower if any director of the Institution is nominated by the
Institution or the Central Government as director on the Board of such borrower or is elected on the Board
of such borrower by virtue of shares held in the borrower by the Institution.
Explanation.— For the purpose of this section, “substantial interest” in relation to a borrower, means
the beneficial interest held by one or more of the directors of the Institution or by any relative of such
director as defined in clause (77) of section 2 of the Companies Act, 2013 (18 of 2013) whether singly or
taken together, in the shares of the borrower, and the aggregate amount paid-up on which either exceeds
fifty lakhs rupees or two per cent. of the paid-up share capital of the borrower, whichever is lesser or such
other threshold as may be prescribed.
19. Related party transactions.—(1) Except with the consent of the Board and subject to such
conditions as may be prescribed, the Institution shall not enter into any contract or arrangement with a
related party with respect to—
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(a) sale, purchase or supply of any goods or materials;
(b) selling or otherwise disposing of, or buying, property of any kind;
(c) leasing of property of any kind;
(d) availing or rendering of any services;
(e) appointment of any agent for purchase or sale of goods, materials, services or property;
(f) such related party's appointment to any office or place of profit in the Institution, its subsidiaries
or joint ventures or associate companies;
(g) underwriting the subscription of any securities, or derivatives thereof, of the Institution:
Provided that no contract or arrangement involving transactions exceeding such sums as may be
specified by regulations, shall be entered into except with the prior approval in the general meeting of the
shareholders:
Provided further that no shareholder shall vote in such general meeting to approve any contract or
arrangement which may be entered into by the Institution, if such shareholder is a related party:
Provided also that nothing in this sub-section shall apply to any transactions entered into by the
Institution in its ordinary course of business, other than transactions which are not on an arm's length basis:
Provided also that the requirement of approval under the first proviso shall not be applicable for
transactions entered into between the Institution and its wholly owned subsidiary, if any, whose financial
statements are consolidated with the Institution and placed before the shareholders at the general meeting
for adoption.
Explanation.—In this sub-section,—
(a) the expression “office or place of profit” means any office or place—
(i) where such office or place is held by a director, if the director holding it receives from the
Institution anything by way of remuneration over and above the remuneration to which he is entitled as
director, by way of salary, fee, commission, perquisites, any rent-free accommodation, or otherwise;
(ii) where such office or place is held by an individual other than a director or by any firm, private
company or other body corporate, if the individual, firm, private company or body corporate holding it
receives from the Institution anything by way of remuneration, salary, fee, commission, perquisites,
any rent-free accommodation, or otherwise;
(b) the expression “arm's length transaction” means a transaction between two related parties that
is conducted as if they were unrelated, so that there is no conflict of interest.
(2) Every contract or arrangement entered into under sub-section (1) shall be referred to in a report
made by the Board to the shareholders, along with the justification for entering into such contract or
arrangement.
(3) Where any contract or arrangement is entered into by a director or any employee, without obtaining
the consent of the Board or approval by a resolution in the general meeting of the shareholders under subsection (1) and if it is not ratified by the Board or, as the case may be, by the shareholders at a meeting
within three months from the date on which such contract or arrangement was entered into, such contract
or arrangement shall be voidable at the option of the Board or, as the case may be, of the shareholders and
if the contract or arrangement is with a related party to any director, or is authorised by any other director,
the directors concerned shall indemnify the Institution against any loss incurred by it.
(4) Without prejudice to anything contained in sub-section (3), it shall be open to the Institution to
proceed against a director or any other employee who had entered into such contract or arrangement in
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contravention of the provisions of this section for recovery of any loss sustained by it as a result of such
contract or arrangement.
(5) Any director or employee of the Institution who had entered into or authorised a contract or
arrangement in violation of the provisions of this section, shall be liable to pay penalty of a sum of up to
twenty-five lakh rupees.
20. Performance review of Institution.—(1) The performance of the Institution shall, once in every
five years, be reviewed by an external agency to be appointed by the Central Government.
(2) The external agency shall review the performance of the Institution for the last five years with
respect to the purpose and objectives of the Institution as set out in section 4 and shall take into account
such key performance indicators as may be prescribed.
(3) The external agency shall submit a report of its findings to the Board which shall forward a copy
thereof along with action taken, if any, pursuant to such report to the Central Government within a period
of three months from the date of receipt of the report.