NEW DELHI: Finance Minister Nirmala Sitharaman on Monday tabled a Bill to set up a dedicated development finance institution (DFI) to provide cash to India’s infrastructure sector. According to the bill, the institution will be based in Mumbai and will give financial aid to infra projects in India, partly in India, and partly outside country. The Union Cabinet has already given its go-ahead.
“Its aim is to address market failures that stem from the long-term, low margin and risky nature of infrastructure financing. The Institution shall be wholly owned by the Central Government to begin with in order to foster confidence on its stability and sustainability and to raise resources at competitive rates,” the Bill laid out.
The government will provide the institution with grants and contributions, guarantees at concessional rates for foreign borrowings, and any other concessions. “Dilution or sale of stake may be considered once the institution has achieved stability and scale in its business operations, but the government would at all times hold 26 per cent of the paid-up voting equity share capital of the Institution,” the Bill stated.
As announced earlier, the government will infuse Rs 20,000-crore initial equity over two years. The Bill also provides that the central government may support the institution through grants or contributions in the form of cash or marketable Government securities.
The introduced Bill also provides for the protection of action taken in good faith by the institution or its staff. No agency will conduct any enquiry into any offence alleged to have been committed without the previous approval of the competent authority.