India to create new bank with ₹1 trillion capital to fund logistics projects?

January 8, 2021: The Indian government is considering a proposal to create a bank with ₹1 trillion ($13.7 billion) equity capital to help fund port, road and power projects.

"The new entity is likely to be a part of the budget announcement in February. The existing India Infrastructure Finance Co., which has a 20 billion rupee corpus, will be merged with the bank. Initially, the institution will be funded by the government, which will later invite investors. It could be on the lines of state-run National Investment and Infrastructure Fund Ltd., which counts the Canada Pension Plan Investment Board, Asian Development Bank and Abu Dhabi Investment Authority among its investors," reports Economic Times.

Attracting foreign investment is also crucial to meet the government’s goal of spending $1.5 trillion on new roads, rail links and other infrastructure over the next five years as public finances deteriorate.

The government pumped nearly ₹1.7 trillion into public sector banks in the two years to March 2020. But a widening budget deficit and weak revenue growth put a brake on any further recapitalization plans for the current financial year.