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Proposed development financial institution must be based on long term investment: Former RBI dy guv

The proposed DFI must attract patient capital

The proposed new Development Financial Institution (DFI) must attract ‘patient capital’ investors as well as leading experts on its board and in top management, former deputy governor of RBI Rakesh Mohan said.

Patient capital refers to long term investment with no expectation of immediate returns.

Mohan has also served as executive director at the International Monetary Fund (IMF).

Mohan also proposed that the new DFI should be headquartered in Mumbai, India’s financial capital. He also said that the first chief of the proposed DFI should be a person with India’s best interests in mind.

Finance Minister Nirmala Sitharaman proposed setting up of a DFI in the Union Budget of 2021-22 to address issues relating to debt financing needs of the infrastructure sector. The minister said that a Bill will be introduced in Parliament to set it up with a provision of Rs 20,000 crore

“The ambition is to have a lending portfolio of at least Rs 5 lakh crore for this DFI in three years-time,” she had said. According to reports, financial services secretary Debasish Panda has said that India Infrastructure Finance Company Limited could be subsumed into the new DFI – the National Bank for Financing Infrastructure and Development.

The proposed DFI will play a crucial role in realising the National Infrastructure Pipeline, under which around 7,000 projects have been identified with an estimated Rs 111 lakh crore-worth of investment between 2020 and 2025.