Need DFIs for push to infrastructure sector in long term, says SBI MD

There is a need for a development finance institution for funding long-term needs of the infrastructure sector, State Bank of India Managing Director Ashwani Bhatia said on Saturday

There is need for a development finance institution (DFI) for funding long-term needs of the infrastructure sector, State Bank of India managing director Ashwani Bhatia said on Saturday.

The government is actively considering setting up a DFI to meet the financing need of infrastructure sector which according to National Infrastructure Pipeline report requires a massive funding of Rs 111 lakh crore over the next five-year period ending 2024-25.

"My short answer would be yes," Bhatia said to a question if the time has come to relook at setting up a DFI in India.

"State Bank of India was a working capital bank in the 80s and 90s. We were pretty much the gold standard. ICICI and IDBI and other got the complete project and then moved on from there. We would love to have DFIs back into the arena," he said at a virtual conference organised by Ficci.

ICICI and IDBI in previous avatar were DFIs and even the country's oldest financial institution IFCI Ltd acted as DFI.

On Friday Economic Affairs Secretary Tarun Bajaj said DFI like entity is needed and there would be some good progress on that front in the months to come.

Bajaj had said the government has created a debt platform in the National Investment and Infrastructure Fund (NIIF) for which there was a Cabinet announcement.

"The Government of India is committed to giving Rs 6,000 crores in the next two years...that would be leveraged with debt by NIIF and we will be putting in more than Rs 1 lakh crore into infrastructure sector on the debt side ...other than the equity side.

"While DFI is in the works, we are also taking other steps to ensure that infrastructure spend happens and both debt and equity are taken care of," he said.

Meanwhile, ICICI Lombard managing director Bhargav Dasgupta said, "If we have to do that model (DFI), we probably have to take some of the learnings of the past."

Speaking at the event, Sanjay Nayar, Partner and CEO of KKR India, said the country cannot become Aatmanirbhar only on foreign capital but need huge amount of domestic capital as well.

"The government can play an important role by having some very unique and very focused local sovereign fund that can catalyse foreign capital to come behind it. I think NIIF is a great example. A few more of those targeted towards SMEs, MSMEs, equity, debt are absolutely critical," Nayyar said.