Parliament to consider bill to set up new Development Finance Institution

Live Mint, January 29, 2021

The Parliament will consider passing a law to set up a new development finance institution (DFI) to finance infrastructure projects.

Towards this, National Bank for Financing Infrastructure and Development Bill, 2021 will be introduced in the ongoing budget session of the Parliament.

The government will also introduce the ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. The proposed law will set up a “facilitative framework” for creation of an official digital currency that will be issued by the Reserve Bank of India (RBI).

The ongoing Parliament session will also consider 18 other bills, including the Finance Bill, Electricity (Amendment) Bill, 2021 and the Mines and Minerals (Development and Regulation) Amendment Bill, 2021.

The Cryptocurrency and Regulation of Official Digital Currency Bill also provides for the creation of a legislative framework on an official digital currency. An RBI booklet on payment systems issued on 25th Jan also showed that the central bank is exploring whether to issue a digital version of the rupee.

The finance ministry had started working on the structure of a new DFI last year. DFI will be government backed specialized institution to offer funds for infrastructure projects. This help in funding projects under the National Infrastructure Pipeline (NIP).

“To set up a new Development Financial Institution (DFI) as a provider, enabler and catalyst for infrastructure financing and as the principal financial institution and development bank for building and sustaining a supportive ecosystem across the life cycle of infrastructure projects,” according to information available on Lok Sabha website. The details of the bill will be made public once it is tabled in the Parliament.

While the Electricity (Amendment) Bill’ proposed amendments include measures such as “de-licensing” of the power distribution business to bring in competition, the Mines and Minerals (Development and Regulation) Amendment Bill on its part will usher in mineral sector reforms including helping auction more mines.

The other bills include multi-state cooperative societies (Amendment) bill, 2021 that will enable co-operative societies to raise resources more effectively by promoting functional autonomy and professionalization. The Competition (Amendment) Bill, 2021 will also be introduced to bring structural changes in the governing structure of the competition commission of India (CCI).

A metro rail Bill will also be introduced and considered for passage. The proposed law is expected to provide legal framework for construction, operation and maintenance of metro rail projects including those under public private partnership (PPP) mode after enactment of the Bill.

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