Report Launch: The India Blended Finance Narrative Report

In this interview, Aparna Dua from Asha Impact and Divya Pingle from IIC talk about the why of this report and give us a glimpse into the highlights of The India Blended Finance Narrative (download report). You can also use Blended Finance Deal Tracker: https://lnkd.in/dH4Uh8iA

This report is the first effort to build a comprehensive compendium of information and insights to drive-up the adoption of blended finance in funding impact action in India.

The report highlights the need for additional sources of finance to bridge the funding gap in achieving the Sustainable Development Goals (SDGs) by 2030. While governments have allocated significant capital, commercial capital can play a crucial role in filling the gap if opportunities are well-structured and align with the risk-return profile. Grants and philanthropic capital can be leveraged in innovative ways to reduce investment risks and direct commercial capital towards specific social and development objectives. This approach, known as blended finance (BF), presents a significant opportunity for various investor classes to expand investments in impact-linked sectors.

The report also highlights that investors and intermediaries face several challenges in this space. These include complex legal frameworks that hinder blending, a lack of data, documentation, and transparency, concerns about expensive and time-consuming structures, a limited strategic view on blending as an investment or giving approach, a scarcity of viable projects, and limited capacity for impact measurement, particularly among commercial investors.

The report also suggests several areas of intervention to unlock philanthropic capital from domestic foundations and family offices, as well as commercial investments from banks and non-banking financial companies (NBFCs). These interventions include addressing critical legal and regulatory hurdles, such as allowing social venture funds to provide loans directly to non-profit and for-profit social enterprises and relaxing the Foreign Contribution (Regulation) Act, 2010. Additionally, the report emphasizes the importance of improved data sharing and documentation of transaction structures and success stories to increase awareness and understanding of blended finance. It also highlights the establishment of a collaborative platform, the India Blended Finance Collaborative (IBFC), by the IIC and USAID India. The IBFC aims to accelerate and mainstream the use of blended finance in India by providing curated knowledge, resources, and networks to help investors find suitable projects in sectors of interest. Government participation is crucial in this initiative, and the recently announced Social Stock Exchange and CSR exchange platform are seen as potential structural interventions to facilitate collaboration.

Overall, the report emphasizes the need for collective action to scale the opportunities presented by blended finance structures, and it proposes specific interventions to unlock philanthropic and commercial investments in support of sustainable development in India.