DFIs: Look before you leap

Before setting up any new development bank, the govt must examine the contribution and performance of the existing ones

There is renewed interest in development financial institutions (DFIs), or development banks, globally. This is mainly attributed to the success of China’s DFIs — initially in the domestic economy and later globally. Singapore and Brazil, too, have been cited by many as success stories for DFIs. In some developed countries, there is a growing interest in the idea in view of the moderation in their gross domestic product (GDP) growth. 

In India, the appeal of DFIs is growing, but this is mainly driven by the stress in the banking sector as well as the non-banking financial companies, mainly due to