In the wake of lending to emerging economies not yielding adequate returns, multilateral lender Asian Development Bank on Thursday said that with limited capacities, its assistance to India and other developing countries may face constraints in future.
"We have no solid base of capital to continue to lend at higher levels than before. But of course there are challenges to keep this level of lending,” ADB President Takehiko Nakao, who is here for the bank’s annual meeting, told reporters. He did emphasise that the bank would increase its lending to India. He said that the bank’s income resources invested in advanced economies had come down due to softening of global interest rates and added that the bank was working on ways to maintain a sustainable level of lending.
ADB lent $ 2.4 billion loan to transport, energy, commerce, industry, trade and finance sectors in India, its largest borrower, in 2012.
On the expansionary monetary policy in advanced economies and the scare of asset bubble in emerging economies arising out of it, Nakao expressed confidence that emerging economies were in a position to manage the inflows.
“I feel that expansionary monetary policy, if it causes inflow in emerging economies, is welcome and if there is an assets bubble then countries can manage those inflows,” Nakao said, even as he sought to justify expansionary monetary policy by the developed world.
On setting up of BRICS bank, he said he welcomed its formation and would cooperate with it, but was quick to add that banking business was not an easy one, as finding good projects, monitoring and lending posed a challenge.
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