Development Finance Institution

(GS PAPER-3 Investment Models

Source- India Today)

Context

 Recently cabinet has approved the setting up of Development Finance Institution with an initial capital infusion of rupees 20000 crore

 key points

  •  Finance minister in the union budget 20-21 has stated that India will set up a new DFI called the National bank for financing infrastructure and development
  • DFI will start with 100% government ownership and will gradually be brought down to 26%
  • DFI  will have a professional board  and 50% of them will be non official directors
  •  initial capital infusion of 20000 crore will help in raising  up to 3 lakh crore in the next few years
  • DFI would seek to raise funds from global pension and insurance sectors for investment in new project carrying certain tax benefit
  • Sources of capital of the banks is national or International development fund

 Background

  •  the first DFI was the first industrial Financial Corporation of India that was launched in 1948
  • IDBI, UTI,NABARD,EXIM Bank  are the other major DFIs
  •  Later several of them were converted into bank  like ICICI, IDBI Banks etc

 objective of DFI

  •  To mobilize the 111  lakh crore required for funding of the ambitious National infrastructure pipeline
  •  As India does not have a Development Bank DFI would fulfil the need to have an institutional mechanism

-Khyati Khare

Download Current Affairs of 27th March 2021