ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Development Financial Institutions at the Crossroads

at the Crossroads The DFI model has failed in India. ICICI has become a universal bank. The IDBI repeal bill has been introduced in the Lok Sabha. IFCI has almost collapsed, its networth being negative. The condition of other DFIs is no better. There were structural infirmities in the model. NPAs and lack of concessional funds made DFI operations unsustainable. Finally, the policy framework designed the exit. The alternative, i e, universal banking is likely to face bigger challenges. Both the regulator and the government may have to initiate some measures to fill in the gap created by the demise of DFIs. Banks may have to be provided long-term funds facility to meet investment needs of long-gestation and infrastructure projects.

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