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

14 Aug

ABC of Sterilisation

'The Supreme Court has directed Delhi, Noida, Gurgaon, and Ghaziabad authorities to urgently round up and shift stray dogs to shelters, stressing the need to protect children from

Read More

14 Aug

Post and pre-matric scholarships

'The  Union government is considering revising the parental income limit for eligibility in availing post and pre-matric scholarships administered to students from marginalise

Read More

13 Aug

Working of satellite internet

'Satellite internet is revolutionizing how we connect, extending high-speed access to virtually every corner of the globe, regardless of location.' Imagine getting online from t

Read More

India’s First Ai-Driven Magazine Generator

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