Cabinet approves setting up Development Finance Institution

Union Cabinet has 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. Briefing reporters after the Union Cabinet meeting, Finance Minister Nirmala Sitharaman said that 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. She said, the Government is also planning to issue some securities to this Institution  by which the cost of funding will come down and all this  will help  DFI  leverage  initial capital which  draws funds from various



sources.

She said through this the government is  expected to raise a considerable amount from the market. The Finance Minister said, the  DFI is expected to raise up to  3 lakh crore  rupees in the next few years. The Institution will also have some tax benefits for a 10-year long period and the Indian Stamp Act too is  being amended. 

About the structure of the Development Finance Institution, Ms Sitharaman said that it will have a professional board in which there will be at least 50 per cent of them will be non official director and person of eminence is also envisaged in the board.

She said that the government is looking at a complete professional set up of the DFI and with this professional human resource, the Organisation will rise to the expectation of the market.