The Union Cabinet on March 16, 2021 approved a bill to set up Development Finance Institution (DFI) with an initial capital infusion of 20 thousand crore rupees.
- The bill will be tabled in Parliament during the current Budget Session.
- DFI is expected to raise long-term funds for infrastructure development projects in the country.
- The initial grant to the DFI will be 5 thousand crore rupees and additional increments of grants will be made within the limit of 5 thousand crore rupees.
- The DFI’s target is to lend Rs 5 trillion over three years. The DFI would have tax benefits for 10 years.
- Since the institution is owned by the government, this mostly ensures that it gets access to cheap funds. It would also ensure that in case of accessing offshore funds, a sovereign backing keeps a lid on costs.
