Exclusive | New Development Finance Institution to be 100% owned by govt

The new Development Finance Institution, proposed by Finance Minister Nirmala Sitharaman in Budget 2021, will be 100 percent owned by the government, Economic Affairs Secretary Tarun Bajaj told Moneycontrol.

“To begin with, the DFI will be 100 percent government owned. Later on, it will get in more stakeholders as per its financing needs,” Bajaj said.

“Right now it will be a government-owned DFI. It will be through legislation, which will also enable the setting up of private DFIs. There will be a provision that if in the later stages, the DFI wants to diversify its equity, it will be able to do that. The DFI will be able to access low-cost funds so it can lend competitively for infrastructure financing needs,” Bajaj said.

Bajaj’s colleague, Financial Services Secretary Debashish Panda, had earlier this week confirmed that the DFI will be named the National Bank for Financing Infrastructure and Development. Additionally, Chief Economic Advisor Krishnamurthy Subramanian had told Moneycontrol that the bill for the new DFI could be tabled later in the current Budget Session of Parliament or early in the Monsoon Session.

“Infrastructure needs long-term debt financing. A professionally managed Development Financial Institution is necessary to act as a provider, enabler and catalyst for infrastructure financing,” the finance minister had said in her Budget speech on February 1.

“Accordingly, I shall introduce a Bill to set up a DFI. I have provided a sum of Rs 20,000 crore to capitalise this institution. The ambition is to have a lending portfolio of at least Rs 5 lakh crore for this DFI in three years’ time,” she said.

The DFI is part of the government’s push to create jobs and boost demand through a nationwide infrastructure push. The plan also includes a capital expenditure target of Rs 5.54 lakh crore for 2021-22, compared with a revised estimate of Rs 4.39 lakh crore for 2020-21.