1. 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 Presented by Dr. Sailendra Narain Chairman Centre for SME Growth & Development Finance (CESMED) ( E:mail - snpn@vsnl.net )snpn@vsnl.net CESMED

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. DFIs at Cross- Roads Development Financial System going out of focus DFIs sagging financial health made them uncompetitive DFIs: Obstacles & Limitations Resources CostLegal RestrictionsRigid EnvironmentBanks Competition

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 (Rs. Million) YearSanctionedDisbursed 1998-9981035905 1999-00101977097 2000-01119087650 2001-0279696389 2002-0336293072

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