Blended Finance is the strategic use of development finance for the mobilization of additional finance for the sustainable progress in the developing economies. Blending can be characterized as the integration of public concessional ODA (Official Development Assistance) with private or public resources, with the goal of mobilizing structural funds. The significant impact on development results are based on selecting who the collaborators and recipients are, which should hold integrity in judgment of the process, developing the design, evaluating as well as in tracking the systems.


The arising of blended finance has brought in great interest in implementing the idea to close the financial gap that has prevented the successful execution of the United Nations Sustainable Development Goals (SDGs), which were set in September 2015.

While the idea of blended finance may differ, they often have common characteristics. At its base, blended finance mobilizes extra commercial funding, usually from private funds, to support the global development community in carrying out environmental targets. The characteristics of blended finance are that, it unites financial investors with a single set of financial and social objectives aligned with the SDG framework’s key principles.


Leverage: The strategic usage of development finance and charitable money to mobilize and integrate enormous amounts of private resources.

Impact: These Investments bear a measurable social, ecological, and economic effect. 

Returns: Risk-adjusted market yields for only those individual investors who fulfill the corporate goals and responsibilities as trustees.


COVID-19 lockdown interrupted two-thirds of the Indian economy, and the poor faced an unfair share of the hardship, as they are primarily self-employed outside of the main market (forming of 75 percent of rural households and 50 percent of metropolitan ones). Free cash flow is in huge demand during such a calamity. However, deprived communities often lack access to credit since they have little savings and no medical coverage.

Since individuals have no systematic credit score, the finance they may need to safeguard their own livelihoods and restore their living standards seems to be almost hard to obtain from systematic financial institutions, which creates an endless loop: given that they are not accepted by systematic financial institutions, they would then remain to be refused credit facility. The outbreak is also having an adverse impact on microcredit, which has been an important source of funds for this kind of unsafe community since their flexibility and payback schedules have really been broken off.

Blended finance is a method that may be used to address these issues. Subsidized capital can mobilize added commercial resources and produce a compounding impact by using charitable funds to minimize portfolio risk and equalize the risk models. This is important especially when the crisis reaches beyond the limits of traditional fundraising and it helps quicken the healing process to these underdeveloped countries.

Multiple constraints have held back the expansion of blended finance in India.

  • To be considered as donation money in India, funds must be channeled through a non-profit organization.
  • In the Indian policy environment, the blending of commercial and philanthropic resources is challenging since our legislative structure clearly defines the use of charity funds and does not allow them to be invested into for-profit activities.
  • Compared to the United States, wherein Program Related Investments (PRIs) allows charities to take part in for-profit social aid operations, Indian legislation does not allow charitable expenses to pursue a yield on money. 
  • When taking part in non-profit operations, financial institutions confront comparable financial and administrative obstacles.
  • Concisely, as there are no standard models for blended financing in India, customized deals must be made, which are upset with ethical, administrative, and tax payments, making them costly and unappealing. 



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