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.