The association also asked industry bodies like Ficci, Assocham and CII to take up the issue of merger of the four DFIs with the finance minister and the Prime Minister.
In a letter to banking secretary NS Sisodia, the union said the creation of a single institution could have better focus, wider national reach, rationalised manpower, diversified portfolio and can also bring down NPA and end inter-institutional competition.
Consolidation of DFIs could be attempted through the merger of IDBI, IFCI, IIBI and IDFC in order to form a very strong, healthy, broad-based and diversified mega DFI, which would provide development financing to projects in industry and infrastructure sectors, IFCI officers and employees association said.
The association suggested that the merged entity could be provided with funds at concessional rate and allowed to accept cheaper deposits, so that it can withstand global economic pressures.
It said the merged institution could also operate like special purpose vehicles with mandate to function as economy multiplier and not as a profit centre - a model which China has adopted long time back.