Multi-stakeholder Consultation on Financing for Development in the Asia-Pacific Region.

1. CESMED Multi-stakeholder Consultation on Financing for Development in the Asia-Pacific Region. Organised by The United Nations - Department of Economic and Social Affair in collaboration with Association of Development Financing Institutions in Asia & the Pacific “Development Financial Institutions at Cross-roads Rethinking their Role & Systemic Reforms” Dr. Sailendra Narain Chairman Centre for SME Growth & Development Finance (CESMED) ( E:mail - snpn@vsnl.net ) Presented by

2. DFIs and Economic Development * DFIs: Systemic and institutional importance * DFIs’ contributions in the last 5 decades * Millennium Goals : - Financing for Development (FfD)and role of DFIs

3. Resources Cost Legal Restrictions Banks’ Competition Rigid Environment DFIs at Cross- Roads Development Financial System going out of focus DFIs’ sagging financial health made them uncompetitive DFIs: Obstacles & Limitations

4. Development Financing : An Overview • Regional Economic Contributions by DFIs • Asia - Africa - Latin America • Greater Mekong Sub-region (GMS) – Economic Corridors • India- DFIs Performance & FICCI Survey results

5. GMS – Economic Corridors

6. Indian DFIs Performance

7. Indian DFIs - FICCI Survey Results RESPONDANTS’ REPLIES- GRAPHIC PRESENTATION ( Source : FICCI Research Paper )

12. Whether Development Finance Still Relevant ? • The Premise: - Development financing as a system and DFIs as an institution are central & essential for development - DFIs & commercial banks should co-exist rather than compete - Given this premise: = DFIs need to be made competitive & viable = DFIs’ traditional role must change with systemic reforms

13. Suggested Road-Map • DFIs to be brought back in sharp focus • Policies of Governments’ & Central Banks’ to be re-oriented • Friendly enabling environment, level-playing field, restructuring and setting up special fund for resource support • Linking Micro Finance Institutions (MFIs) with formal DFIs

14. Issues for Discussion • Are DFIs still relevant? Whether they should perish or survive ? • If DFIs are central to the development process, how can they be made viable, relevant and competitive? • If a three-tier development financial system is suggested: (i) Apex DFI (ii) Regional DFIs and (iii) Local DFIs (MFIs) will the system be viable and effective? • To tackle “Cost of Resources” problem,,how about creating “DFIs Development Fund” at Regional levels by federating DFIs of a few countries (such as all DFIs of Mekong Region six countries) with sovereign guarantee, political risk cover from MIGA / World Bank, and better rating.This Regional Fund with strong rating and can attract resources at affordable rates and on-lend to member DFIs for operations. • Perhaps ADFIAP can take a lead in setting up a DFIs Development Fund for the Greater Mekong Region as a pilot project, in which Governments, financial institutions, multilateral institutions and private sector could become stakeholders.

15. THANK YOU