The government on
Wednesday announced the appointment of veteran banker K V Kamath as chairperson
of the newly set up Rs 20,000 crore development finance institution NaBFID to
catalyse investment in the funds-starved infrastructure sector.
Parliament had in March
cleared the National Bank for Financing Infrastructure and Development (NaBFID)
Bill 2021 to support the development of long-term non-recourse infrastructure
financing in India, including the development of the bonds and derivatives
markets necessary for infrastructure financing.
"New approach to
building #AatmaNirbharBharat! Central Government has appointed K V Kamath to
the post of chairperson, National Bank for Financing Infrastructure and
Development, a newly set up DFI in India," Department of Financial
Services (DFS), under the finance ministry, said in a tweet.
The DFS, in a notification,
said the central government has appointed K V Kamath to the post of chairperson
of NaBFID initially for a term of three years from the date of assumption of
charge.
Kamath, the first head of
the New Development Bank (NDB) set up by the BRICS group of countries, had
completed his five-year tenure last year.
The 73-year-old banker,
known among his friends as KV, began his career at erstwhile development
finance institution (DFI) ICICI in 1971.
Back in 2008, when ICICI
Bank was hit by widespread rumours of 'run-ons', Kamath led from the front and
was instrumental in its complete turnaround.
He retired as managing
director and CEO in April 2009 and became its non-executive chairman.
He passed on the baton to
Chanda Kochhar, who stepped down in 2018 after being embroiled in the ICICI
Bank-Videocon money laundering case.
Kamath, an IIM-Ahmedabad
alumnus, also served on the board of IT major Infosys as the non-executive
chairman.
The DFI has been
established as a statutory body to address market failures that stem from the
long-term, low margin and risky nature of infrastructure financing.
The DFI, therefore, has
both developmental and financial objectives.
To begin with, the
institution will be 100 per cent government owned.
It will help fund about
7,000 infra projects under the National Infrastructure Pipeline (NIP) which
envisages an investment of Rs 111 lakh crore by 2024-25.
The DFI will remain outside
the purview of CAG, CVC and CBI, a move aimed at enabling faster
decision-making.
The government expects the
DFI to leverage this fund to raise up to Rs 3 lakh crore in the next few years.
During the pre-liberalised
era, India had DFIs which were primarily engaged in the development of
industry.
ICICI and IDBI, in their
previous avatars, were DFIs. Even the country's oldest financial institution
IFCI Ltd functioned as a DFI.
In India, the first DFI was operationalised in 1948 with the setting up of the Industrial Finance Corporation of India (IFCI).
Subsequently, the
Industrial Credit and Investment Corporation of India (ICICI) was set up with
the backing of the World Bank in 1955.
The Industrial Development
Bank of India (IDBI) came into existence in 1964 to promote long-term financing
for infrastructure projects and industry.