Page 36 - Banking Finance December 2021

ARTICLE

DEVELOPMENT

OF FINANCE

INSTITUTION -

THE WAY

FORWARD

F inance Minister Nirmala Sithraman while across the life-cycle of infrastructure projects". It will help

to cater to the wholesale and long-term financing needs of
presenting the Union Budget 2021-22 stated that
India and possibly fill the gap in long-term financing.
India will set up a new Development Finance
Institution (DFI) called the National Bank for
Financing Infrastructure and Development (NaBFID). The What Is A Development Finance
institution will be set up on a capital base of Rs.20,000 crore Institution?
and will have a lending target of Rs.5 lakh crore in three
years. Debt financing through the infrastructure investment The Development Finance Institution (DFI) are organizations
which are either owned by the government or by charitable
trust (InvIT) and real estate investment trust (REIT) routes
will be enabled through necessary amendments in the rules. institutions to finance infrastructure projects that are of
national importance but may or may not meet commercial
return standards. In most cases, these agencies are
Development Finance Institution describes the institution "as
a provider, enabler and catalyst for infrastructure financing government owned and their borrowings enjoy the comfort
and as the principal financial institution and development of government guarantees, which help bring down the cost
bank for building and sustaining a supportive ecosystem of funding. The objective also includes issuance of guarantees
and facilitating development of a bond and derivative
market. Proposed tax breaks will enable increasing cost-
About the author effective resource raising.

Alekh Kumar Sahoo Objectives of Development Finance
Faculty (Chief Manager)
Union Bank of India, Institutions
Staff Training Centre, Y The prime objective of DFI is the economic
Bhubaneswar. development of the country

36 | 2021 | DECEMBER | BANKING FINANCE