The new financial institution for infrastructure is likely to have an authorised capital of Rs 1 lakh crore, with the equity of IIFCL likely to be subsumed into the new structure.

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The proposal as of now is to keep it 100 percent government-owned and the equity of IIFCL of around Rs 20,000 crore will probably help get the structure off the ground, in the initial period.

It’s to be noted the government had proposed Rs 10,000 crore of recap bonds for IIFCL in this budget but that proposed infusion didn’t take off. It may just be possible the recap bonds will be issued fresh along with the rest of the equity of IIFCL to be subsumed into the new structure.

The new institution may also play an advisory role in the management of infra projects, apart from leveraging the equity capital to raise funds.

The government proposes to bring a new Act of Parliament to create the new financial institution, which may even be introduced in the Budget Session of Parliament.

The cabinet is likely to take up the Development Financial Institution proposal either this week or the next.

(Edited by : Ajay Vaishnav)

First Published:Jan 11, 2021 11:13 AM IST