MUMBAI: India needs development finance institutions (FIs) to fund the capital expenditure needs of Indian companies, said JSW Group chairman Sajjan Jindal.

“What we really need is development financial institutions,” Jindal told ET in an interview. “The government has been talking about it, but it is still in the planning stage. So, I think that is what is really needed – like the old IDBI, IFCI and ICICI. India is a country of entrepreneurs and for that we would need a lot of development FIs.”

The need for development FIs is being felt after banks stopped funding projects due to high bad loans and a longer time nature of their repayment. With banks’ funding short term, mostly less than three years, there are none to fund power or road projects, which take years to build and longer to repay.

So, only a developmental financial institution with longer term funding, say for 10 years or so, could fund infrastructure projects. This was among the critical issues that came up for discussion at Prime Minister Narendra Modi’s pre-budget meeting with top industrialists on Monday, Jindal said.

“We talked about nation-building infrastructure funds and the steps needed for (reaching) a $5 trillion economy,” Jindal said.“We have to become an exporting nation. We discussed how to increase exports from India, by ensuring a level playing field while remaining WTO-compatible,” he said.

The JSW chairman said disinvestment and raising funds for social sectors such as health and education were discussed. He said the PM stressed on significance of global digital compatibility and exhorted industrialists to be prepared for disruptive changes. “The world is going to be very different from what we saw in the last 20 years. And, the next 20 years are going to be 10 times faster,” he said.

Jindal said despite pessimism about growth, there is no better time to invest than during a downcycle. “I have seen (similar) situations… This is the best time to invest; you can build at a lower cost. That’s what we have done in the past one and a half years,” he said.

On liquidity crunch, he said, “The banking system is flush with funds. We heard there is Rs. 4 lakh crore with the Reserve Bank of India under reverse repo. This shows that either banks are not able to lend or not in a mood to lend; also, the borrower is not wanting to borrow,” said Jindal. “The mood now is to wait and watch. The banks too have adopted the same stance.”

On India’s decision to pull out of the Regional Comprehensive Economic Partnership (RCEP), “Unlike the previous government, the current one is very willing to listen to the industry’s voice. Today the country is not fully equipped to have RCEP and to handle the dumping issues that would have followed,” said Jindal.

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