Washington, 24 May-2014, IANS: World Bank President Jim Yong Kim Friday announced the appointment of…
Ufa(AFP): With the $100-billion New Development Bank (NDB) of the five BRICS nations taking shape, the fixed shareholding quota of India or any other member will not come as a restriction in terms of loans given by it.
KV Kamath and Indian PM Narendra Modi AFP
However, the Bank would set certain prudential exposure limits based on various factors, its first chief K V Kamath has said.
“Our aim will be that we do not see only from the point of view of the lenders, but ,” Kamath told PTI in an interview.
Asked whether the lending to the member countries would be on the basis of their contribution to the share capital of the bank, Kamath said: “There certainly will be some prudential limits like any other bank, but we do not need to follow the base share capital for determining lending to a country.” He said the requirements for the infrastructure sector in India and several other emerging markets were huge in the range of USD 1-2 trillion.
“It would not be possible for NDB or any one institution to meet all these requirements and therefore we all would need to partner each other,” he added.
Kamath, an eminent Indian banker who led the country’s top private sector lender ICICI Bank into a financial sector behemoth, said he is confident of India’s growth story and has always believed that the country would emerge as a global power.
“There are other focus areas that would need to be developed. They (India and other BRICS countries) will have to see whether they have a deep enough equity market in their local jurisdiction and they will have to see whether there are other avenues for capital and other resources available.”
“We need to see whether there are enough hedging opportunities available.
Kamath was here for the BRICS Summit, attended by the heads of state for the five member countries (Brazil, Russia, India, China and South Africa), including Prime Minister Narendra Modi. The ratification process for setting up of the NDB was completed during the Summit, while Kamath will take charge in Shanghai on July 20.
The Shanghai-headquartered bank will finance infrastructure and sustainability projects in the five member countries as also other emerging and developing nations.
It has been set up with an initial authorised capital of US $100 billion, while its initial subscribed capital of US $50 billion has been equally shared among the five founding members.
Equal capital contribution has been decided so that the development bank does not fall into the ownership pattern of IMF and the World Bank, with a distorted shareholding.
In addition, the bank has set up a contingency fund of US $100 billion to help BRICS countries to cushion short-term liquidity pressure.