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.