Sign In
Learn bits
Economy
Pradeep Kumar

06/02/21 11:30 AM IST

New Development Financial Institution Bill

In news

The Budget Session of Parliament will consider a new bill to set up a development financial institution (DFI) for the purpose of funding infrastructure projects across their lifespan

Development Finance Institution
  • A development finance institution is an agency that finances infrastructure projects that are of national importance but may or may not conform to commercial return standards.
  • In most cases, these agencies are government owned and their borrowings enjoy the comfort of government guarantees, which help bring down the cost of funding.
  • In setting up a DFI, India will return to an earlier experiment with the idea.
  • ICICI, it in original form, and IDBI were both set up as DFIs but were later converted into universal banks as it was believed that they needed access to public deposits.
  • The earlier generation of DFIs ran into the problem of financing because retail deposit access was cornered by banks and availability of long-term financing without government guarantees was limited
Significance

The legislation for setting up a development finance institution to fund infrastructure projects will allow for such institutions to be formed by the private sector

Source: PIB

More Related Current Affairs View All

22 Aug

Uttarakhand State Authority for Minority Education (USAME) Bill, 2025

'The Uttarakhand Assembly on Wednesday passed the Minority Education Bill, 2025, extending minority status benefits to institutions run by the Sikh, Jain, Buddhist, Christian, and

Read More

22 Aug

India needs a national space law urgently

'A nation with a strong base in science and technology is a nation with a strong backbone” — these words of A.P.J. Abdul Kalam ring truer than before as India celebrate

Read More

22 Aug

Organ transplantation

'The National Organ and Tissue Transplant Organisation (NOTTO) recently issued a direction stating that women patients and relatives of deceased donors will receive priority in org

Read More

India’s First Ai-Driven Magazine Generator

Generate Your Custom Current Affairs Magazine using our AI in just 3 steps