India, March 17 -- The Union Cabinet on Tuesday cleared the introduction of a bill in Parliament to set up a professionally run Development Finance Institution (DFI) with Rs.20,000 crore government-funding to leverage about Rs.3 lakh crore long-term finance for infrastructure sector projects, finance minister Nirmala Sitharaman said.

After setting up a wholly owned DFI, the government will gradually reduce its stake to 26%, she told reporters after a Cabinet meeting. The government will infuse Rs.20,000 crore capital in the new financial institution, she said.

"Today, the Cabinet has cleared this bill through which we will have an institution and institutional arrangement, which will help in raising long-term funds," she said.

The fina...