OECD Updates Blended Finance Guidance to Mobilise Private Capital for Development
SDG 17: Partnerships for the Goals | SDG 9: Industry, Innovation & Infrastructure
Institutions: NITI Aayog | Ministry of Finance
The OECD Development Assistance Committee (DAC) has released the updated Blended Finance Guidance 2025, which refines earlier principles for using public and philanthropic funds to mobilise private capital for sustainable development. The guidance reaffirms five principles: anchoring to a clear development rationale, designing to mobilise commercial finance, tailoring to local context, fostering effective partnerships, and ensuring transparency and results.
New emphasis is placed on local currency financing, development of domestic capital markets, and structured exit strategies to prevent long-term reliance on concessional support. The guidance also underlines the use of technical assistance to strengthen enabling environments and stresses disclosure of additionality (ensuring private capital would not have been mobilised otherwise). Expanded case studies demonstrate how blended finance can be deployed across infrastructure, climate, and social sectors.
For India, the updated guidance offers a framework to channel global capital into its massive financing needs in infrastructure, renewable energy, and social sectors. With India already experimenting with credit guarantees, blended funds, and viability gap financing, aligning these instruments with OECD norms could improve credibility, attract institutional investors, and safeguard transparency. The focus on local capital markets is especially significant for Indiaβs ambitions to deepen bond markets and reduce currency risk in foreign investment. Going forward, operationalising these principles will require coordinated action by the Ministry of Finance, NITI Aayog, and sectoral regulators to embed blended finance in a robust institutional framework.
Follow the full report here:
OECD DAC Blended Finance Guidance 2025 (PDF)