Capital structure decision-making process in DFIS: a case study

Abstract

The focus of the paper was on understanding the process of capital structure management of development finance institutions (DFIs) using the Industrial Credit and Investment Corporation of India as a case study. The results indicate that the development of the capital structure pattern of the ICICI has not been systematic. It is also shown that the capital structure of a DFIs greatly influences its investment decisions. The recommendations made are: (a) to lift, at least, partially the restriction on lending rate of DFIs; (b) to convert the government loans to DFIs into equity; (c) DFIs should use the cost of capital concept to improve the quality of their appraisal procedure.