BS READS: Some mistakes India must avoid this time to make DFIs a success

Now that DFIs are making a comeback, three key issues will be crucial for their success -the availability of long-term funds at a reasonable cost, private-sector ownership, and professional management

Manojit Saha | Mumbai
Last Updated at February 18, 2021 21:46 IST

DFIs need long-term funds because they are involved in financing infrastructure and industrial projects, which usually have a long gestation period. Photo: Shutterstock

Among the key reasons why development finance institutions (DFIs) could not survive in their earlier avatar was that a scarcity of long-term financing made the business model of such entities unviable. Now that DFIs are set to make a comeback, with the Union Budget proposing to set one up, three key issues seem crucial for their success – the availability of long-term funds at a reasonable cost, private-sector ownership, and professional management.

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