Parliament earlier in the day cleared NaBFID Bill 2021 to support the development of long-term non-recourse infrastructure financing in India, including the development of the bonds and derivatives markets necessary for infrastructure financing
NEW DELHI :
Terming NaBFID a gamechanger for the infra financing in the country, Financial Services Secretary Debasish Panda on Thursday said the new Development Finance Institution (DFI) should be operational in next 4-5 months.
Parliament earlier in the day cleared National Bank for Financing Infrastructure and Development (NaBFID) Bill 2021 to support the development of long-term non-recourse infrastructure financing in India, including the development of the bonds and derivatives markets necessary for infrastructure financing.
"With the passage of the bill in both Houses of Parliament...it is soon going to become a law...It will be a statutory body which will be set up in a time span of 4-5 months. We should get going in the sense, we'll have the board in position and then the CEO and the deputy MDs," he said at Times Network India Economic Conclave.
He said head hunting for the right person for top-level positions would take some time.
This job actually entails somebody with a world class kind of experience, risk taking ability and understanding of new and innovative means of financing, he said.
The DFI being set up to fund the infrastructure sector will remain outside the purview of CAG, CVC and CBI, a move aimed at enabling faster decision-making.
Besides, the proposed law seeks to provide 10-year tax concession so that it can provide long-term fund at affordable cost to the infrastructure sector.
"We also assign them a key developmental role apart from financing. Also want this institution to be the market maker for various purposes including nurturing and deepening the bond market. So, this new DFI is going to be an enabler, a catalyst and a facilitator. So around that we expect a lot of other private DFIs which we have provided for in the statute to also come up," he said.
All these financial institutions put together would be able to finance National Infrastructure Pipeline (NIP) which envisages an investment of ₹111 lakh crore by 2024-25.
This government-owned DFI will help fund about 7,000 infra projects under the NIP.
The legislation will give effect to the Budget announcement made by the finance minister on February 1. The government has proposed ₹20,000 crore to capitalise the institution and ₹5,000 crore grant.
The government expects the DFI to leverage this fund to raise up to ₹3 lakh crore in the next few years.
Talking about the financial health of public sector banks, Panda said the sector is witnessing improved financials as compared to the previous year and as many as 11 out of 12 banks posted a combined operating profit of ₹25,000 crore.
The provision coverage ratio was at an all-time high of more than 80%, and the capital adequacy ratio is around 13.5%, well above the regulatory floor, he said, adding, gross non-performing assets (NPAs) are at rock bottom and net NPAs have also come down to 3%.
"Now is the appropriate time for privatisation because we have gone through a phase of consolidation. So those banks are also showing good results, they are able to lend big and their balance sheet is growing," he said.
As far as privatisation is concerned, he said, there is a need to look at a variety of issues including policy-related issues and legal issues.
However, he said, investors will find a lot of interest in public sector banks as they have strong fundamentals, sound financials and good capital position.
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