DFI: The government plans to set up a development finance institution in 3-4 months: DFS Secy

New Delhi: According to Financial Services Secretary Debasish Panda, the government will mobilize the 1.11 million rupees needed to finance an ambitious national infrastructure pipeline in the next three to four months. Will be established.

“Infrastructure finance requires patient funding, and banks are currently unsuitable for financing long-term projects that do not generate cash for years, so we need development finance institutions,” he told PTI in an interview. Told.

Even deepening the bond market for infrastructure lending is a problem that has been the focus of government attention, he said, and that something more needs to be done to have a strong bond market for infrastructure lending.

“DFI is needed to fund and boost the credit rating of the project, we are actively working on it, and soon such an institution will be set up. We will hold government shares, etc. The details are being finalized. Whether such an organization is formed by statute.

“DFI will catalyze and fund projects that others don’t want to participate in because of the risks involved,” he said.

In addition, Mr. Panda said work is underway and DFI should be realized soon and could be at the end of the current fiscal year or early next year.

In a previous budget speech, Finance Minister Nirmala Sitharaman proposed establishing a DFI to facilitate infrastructure financing. Under the National Infrastructure Pipeline (NIP), about 7,000 projects have been identified and a whopping Rs. 1.11 million is expected to be invested between 2020 and 25.

NIP is the first initiative to provide world-class infrastructure nationwide and improve the quality of life for all citizens, to reach the goal of a US $ 5 trillion economy by 2025. It is essential.

According to Panda, DFI will play an important development role apart from the funding role.

“All sorts of innovative financial mechanisms are expected of this new institution,” he said.

In the pre-liberalization era, India had DFIs primarily engaged in the development of domestic industries. ICICI and IDBI were DFI in previous avatars. Even IFCI Ltd, the oldest financial institution in the country, played a role as a development finance institution.

In India, the Industrial Finance Corporation (IFCI) was founded in 1948 and the first DFI was in operation. Then, in 1955, the Indian Industrial Credit Investment Corporation (ICICI) was established with the support of the World Bank.

The Indian Industrial Development Bank (IDBI) was established in 1964 to promote long-term financing for infrastructure projects and industry.

Panda talked about the financial position of the banks and said that as of September 30, 2020, 11 of the 12 public sector banks were profitable.

Even total non-performing assets (NPA) have fallen sharply, and provision coverage has risen, he said.

“There is room for improvement in return on assets, and banks are working on it. In general, all financial parameters are showing positive results,” he said.

DFI: The government plans to set up a development finance institution in 3-4 months: DFS Secy

Source link DFI: The government plans to set up a development finance institution in 3-4 months: DFS Secy

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