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

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.
 
According to bankers, DFIs failed earlier because, among other things, a drying up of long-term financing prompted them to turn to banks for their financing needs. This