Government sets-up DFI looks to disburse Rs 5 lakh crore in three years, BFSI News, ET BFSI

The central government has announced setting up of a Development Finance Institutions to boost infrastructure financing.

Finance Minister Nirmala Sitharaman said, “Infrastructure needs long term debt financing. A professionally managed Development Financial Institution is necessary to act as a provider, enabler and catalyst for infrastructure financing. Accordingly, I shall introduce a Bill to set up a DFI. I have provided a sum of `20,000 crores to capitalise this institution. The ambition is to have a lending portfolio of at least `5 lakh crores for this DFI in three years time.”

She added, “Debt Financing of InVITs and REITs by Foreign Portfolio Investors will be enabled by making suitable amendments in the relevant legislations. This will further ease access of finance to InVITS and REITs thus augmenting funds for infrastructure and real estate sectors.”

S Viswanatha Prasad, Founder and Managing Director- Caspian Debt said, “The setting up of a new DFI for providing infrastructure capital and leveraging it is a welcome move, however it should focus on providing capital only to the private sector and non-profits. Another DFI lending to Government entities will not create any differentiator.”