The Union Cabinet on Tuesday approved a Bill to set up a development finance institution, Finance Minister Nirmala Sitharaman announced.

 

The Minister said the government had mentioned that it would be setting up a national bank for funding infrastructure and development activity in the Budget. As of December 2019, she said, there were over 6,000 brownfield and greenfield projects requiring funding.

 

“Even as the Budget session is still on, the Cabinet has already cleared the setting up of a development finance institution,” she said.

 

She said the Budget provided for an initial amount of ₹20,000 crore for the institution, which was expected to raise upto ₹3 lakh crore in the next few years as it can access funds through the market. The institution would have tax benefits for 10 years, she said.

 

The new institution would have a “positive impact on the bond market in India,” the Minister said. It would have a professional board with at least 50% non-official members, she said.