Deja vu on DFIs

The bank-led model of infrastructure financing is fraught with difficulties. But DFIs are not a quick fix

It is reported that the government is working towards reviving Development Finance Institutions (DFIs) for funding infrastructure projects, in order to address the rising challenges of infrastructure financing. In the past, DFIs have not worked well; it is hence useful to place and assess this move in historical context.

It is important to diagnose why previous attempts worked out poorly, and bring that institutional memory into the next take on the problem. Some argue that solving deeper problems, and making the Indian financial system work, is a long-term project, while the benefit of building a DFI right now will be