Cabinet approves DFI plan: Experts discuss
In a bid to bolster infrastructure financing, the Cabinet has cleared the formation of a development financial institution (DFI) with a Rs 10,000 crore infusion this year and another Rs 10,000 crore next year and is expected to raise up to Rs 3 lakh crore as Finance Minister Nirmala Sitharaman promises tax benefits for 10 years. Rajkiran Rai G, Managing Director & CEO, Union Bank of India, and Sunil Mehta, Chief of Indian Banks' Association discussed the same.
In a bid to bolster infrastructure financing, the Cabinet has cleared the formation of a development financial institution (DFI) with a Rs 10,000 crore infusion this year and another Rs 10,000 crore next year and is expected to raise up to Rs 3 lakh crore as Finance Minister Nirmala Sitharaman promises tax benefits for 10 years. Rajkiran Rai G, Managing Director & CEO, Union Bank of India, and Sunil Mehta, Chief of Indian Banks' Association discussed the same.
"DFI is a very welcome move in the present set of circumstances. The government has created a national infrastructure pipeline which is aggregating 7,000 projects for Rs 1.11 lakh crore. To fund such an ambitious infrastructure project in the next five years from 2020 to 2025, the setting up of this DFI will facilitate the process for faster creation of the infrastructure in the country,” Mehta mentioned.
Rajkiran Rai of Union Bank of India stated, “For the success of DFI, in addition to the capital, raising sufficient long-term resources and sufficiently incentivising those investments is what is required.”
In terms of national asset reconstruction company (ARC), Mehta said, “We are into the formation stage. The asset modalities for capital infusion and the participants will be decided later on. Right now, we have sought approval from the government for use of the word national in the national ARC which we have received. We are in the process of setting up that company so that we are can go for other requirements.”
“The main advantage of this system is the debt segregation and freeing of the management time for public sector bank and some of the private sector banks which get engaged in this resolution process. This NARC – the government guarantee which is going to come on the security receipts (SRs) will make it tradable. So immediately for banks which would like to dispose of these SRs, they can realise some portion of the stuck up accounts by trading,” said Rajkiran Rai.
“How much money Union Bank of India will put in the ARC is not yet decided but there are multiple banks which are interested in taking a stake in this ARC. So depending on the requirement, we will put in,” Rai added.
For the entire discussion, watch the video...
(Edited by : Priyanka Rathi)
First Published: Mar 17, 2021 1:02 PM IST
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
I.N.D.I.A. bloc committed to predictable and stable tax environment: Jairam Ramesh
May 21, 2024 6:33 PM
Exclusive | INDIA bloc will ensure stable policy framework, simple GST, end tax terrorism: Jairam Ramesh
May 21, 2024 5:02 PM
Cong leaders 'failed' to protect party's constitution says FM Nirmala Sitharaman in Bihar
May 21, 2024 4:01 PM
Who will succeed Modi? Oppn thinks Amit Shah will, but PM said this
May 21, 2024 2:38 PM