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Government to set up Development Finance Entity
Why is it in news?
- The government plans to set up a Development Finance Institution (DFI) in the next three to four months.
Details:
- The DFI would be set up with a view to mobilise the ₹111 lakh crore required for funding of the ambitious national infrastructure pipeline.
- DFI will help in invest in various projects, as banks are currently not suited for lending for long-term projects which do not generate any cash for years.
- In her last Budget speech, Finance Minister Nirmala Sitharaman had proposed to set up DFIs for promoting infrastructure funding.
- About 7,000 projects have been identified under the National Infrastructure Pipeline with projected investment of ₹111 lakh crore during 2020-25.
- DFI would have a key developmental role apart from the financing role.
- Prior to liberalisation, India had DFIs engaged in development of industry.
- ICICI and IDBI, in their previous avatars, were DFIs.
- The country’s oldest financial institution IFCI Ltd. too had acted as a DFI.