Budget 2021: Government May Constitute A New National Bank Categorically To Finance Infrastructure Development
As we already know budget 2021-22 will lay special emphasis on Infrastructure building, along with some increased health expenditure, as Finance Minister Nirmala Sitharaman has said on several occasions.
In the budget 2021-22 government will increase expenditure on infrastructure building to recover economy and generate more employment.
To make readily capital available for large infrastructure spending, Minister Sitharaman may well announce a special nationalised bank to finance infrastructure, bank is likely to be constituted though a new bill, The National Bank Financing Infrastructure and Development bill 2020, Money Control reported.
Wherein Bank will have an authorised capital of One lakh crore rupee, with an initial paid-up capital of Rs. 20,000 crore, along with direct line of credit access to RBI is also speculated, and necessary changes in RBI Act may also be proposed during budget session.
The government will put higher borrowing limits and lower capital adequacy requirements, and bank will be financed trough tax free fund.
This bank may displace IIFCL (India Infrastructure Finance Company Ltd. (IIFCL), and government may direct Provident Fund (PF), LIC and Pension Funds to save money in the new bank.
Main Purpose of the bank will be to finance National Infrastructure Pipeline (NIP), which is a mega investment worth Rs. 111 lakh crore, where the new bank will play main role in facilitating easy and long term loans to infrastructure projects.
Bank will also handle restructuring infra projects, monetisation of project and monitoring od project schedules and timely completion of project.
This will be a major step towards infrastructure financing in India, as infrastructure financing faces capital crunches regularly, infrastructure paces is already picking up in India, and this will further boost infrastructure development.