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DAILY NEWS ANALYSIS

  • 18 March, 2021

  • 3 Min Read

Proposal for Setting up of “Development Finance Institution Approved

Proposal for Setting up of “Development Finance Institution Approved

The Union Cabinet approved a bill to set up a Development Finance Institution(DFI). It will be called National Bank for Financing Infrastructure and Development (NaBFID).

About National Bank for Financing Infrastructure and Development (NaBFID):

  • Initially, the Government of India will own it with a 100% stake.
  • They will gradually bring it down to 26% in a few years.
  • It will provide finance for social and economic infrastructure projects identified under the National Infrastructure Pipeline(NIP).
  • A professional board with at least 50% of the members as non-official directors.
  • The capital infusion by the Government will be Rs 20,000 crore with an initial grant of Rs 5,000 crore.
  • It is later expected to raise around Rs 3 lakh crore in the next few years by Market funds.
  • The government will provide a 10-year tax exemption to funds invested in the DFI.

What is a Development Finance Institution(DFI)?

  • DFI is an agency that finances infrastructure projects of national importance.
  • These agencies are government-owned.
  • Their borrowings enjoy government guarantees which help bring down the cost of funding.
  • The first DFI in India was the Industrial Financial Corporation of India(IFC).
  • It got launched in 1948.

Source: TH


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05 Apr,2026

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