What is a Development Finance Institution?

New Delhi, Feb 01: The Finance Minister on Monday announced the setting up of a development financial institution (DFI) to help fund infrastructure projects across their lifespan.

While presenting the Union Budget for FY 2021-2022, Finance Minister Nirmala Sitharaman said a "professionally managed" DFI would soon be set up, and the government would introduce a bill to set it up in the budget session of Parliament.

The DFI will have statutory backing, and Rs 27,000 crore capital. To differentiate it from DFIs that existed in the past, she said the DFI will be professionally managed, the FM said today.

What are the development finance Institutions?

The development finance institutions or development finance companies are organizations owned by the government or charitable institution to provide funds for low-capital projects or where their borrowers are unable to get it from commercial lenders.