Finance Ministry Approves A Decision to set up Development Finance Institution
The Finance Ministry Of India Has Approved a decision to set Development Finance Institution. The Finance Minister Of India Announced that The Union Cabinet Has taken a decision to set up a Development Finance Institution(DFI) which will finance long-term infrastructure projects.
She said, ” The Cabinet Had Cleared this bill, through which we will have an institution and institutional arrangement which will help in increasing long-term funds”.
She said Govt has allocated around ₹20K Crore in FY 2022 in budget 2021 to Capitalise this institution and initially they have granted ₹5k crore from the government.
She Said, “Past attempts to have alternative investment funds were taken up, but for various reasons, we ended up with no bank which could take up long-term risk (which is very high) and fund development”.
The Cabinet has cleared this bill, through which we will have an institution and institutional arrangement, which will help in increasing long-term funds,” the finance minister further added.
“We expect the DFI to raise up to Rs 3 lakh crore in the next few years from markets and other sources. The DFI will have certain tax benefits for a 10-year long period and it will have 50 percent, Non-official directors,” she said.
Initially, The DFI, called the National Bank For Financing Infrastructure And Development, will be 100% government-owned, but maybe after some time the government may hold only 26 % stakes.
However, In the Budget 2019-20 speech, Finance Ministry proposed an idea to set up DFIs for promoting infrastructure funding. Around 7,000 projects have been identified under the National Infrastructure Pipeline (NIP) with an investment of ₹111 lakh crore during the years 2020-25.