BRICS Bank to begin funding of projects from April: Kamath

Last Updated 26 February 2016, 13:32 IST
The New Development Bank (NDB) set up by the BRICS countries will approve one project from each member nation in April followed by finalisation of about 10 to 15 projects, mostly green energy ventures, its President K V Kamath said today.

Addressing media here in the Communist giant's financial hub ahead of signing of the bank's headquarters agreement with China tomorrow, Kamath said the NDB will commence funding by finalising a project from each of the BRICS (Brazil, Russia, India, China and South Africa) countries in April this year.

The bank was expected to finalise 10 to 15 projects during this financial year, he said. "We will do a full plate of projects in the next 9 to 10 months of this year," he said.

Kamath, who was accompanied by Russian Finance Minister Anton Siluanaov, the Chairman of the Board of Governors of the NDB, said the initial funding for the projects will be confined to the BRICS countries who have submitted a number of projects for consideration - mainly infrastructure and green energy projects.

The bank commenced its operations with initial subscribed capital of USD 50 billion with total paid of USD 10 billion. The founding members of the bank have already brought in capital of USD one billion as initial contribution, a press release issued by the bank said.

Ruling out lending in concessional terms, Kamath said, "we will not be lending at concessional terms. This is not intention at all. We need to factor in cost of funds and add approbate margin and then lend."

"The cost of funds will be determined by our actual experience in the market. So we will function like a prudent bank should. Figure out cost of funds and add appropriate margin and lend. That is basis with which we will do business," he said.

"We will be resorting to bond issues and raise local currencies where ever it is feasible. Of course where it is required we will supplement with dollar bond issues," he said responding to question.

The NDB is also strategising its linkages and coordination with the China backed Asian Infrastructure Investment Bank (AIIB) which has taken off with with 57 members including India to avoid overlapping of interests.

"Certain areas of NDB and AIIB coincides therefore we agreed to make sure that the activities of our bank and sister bank should not overlap," Siluanaov said.

"The question of overlapping was discussed today and I would like to reiterate that we asked the management of the bank to prepare a strategy not to overlap with the AIIB," the Russian Minister said.

He said while the AIIB looks to finance projects in 57 countries, including the BRICS nations, the NDB’s funding for the time being will be focussed on financing projects in the five-member bloc.

"Therefore, the development strategy of the NDB should take into account the possibility often joint action with other major international finical institutions and exclusive financing for the projects in the BRICS countries," he said.

About the impact of the economic slowdown of the BRICS nations other than India, he said the infrastructure projects were expected to spur growth in the respective countries.

Kamath said the NDB is instituted with a vision to support and foster infrastructure and sustainable development initiatives in emerging economies and developing countries.

"We aim to be a progressive and accessible institution focused on resolving key development challenges through innovative but realistic approaches while working in close cooperation with partner governments, industry and fellow multilateral development banks (MDBs)," he said.

With infrastructure development itself needing investment of over USD 1 trillion a year, it is not only necessary for MDBs to work together but also to reinvent themselves and introduce innovative instruments which can harness and develop local capital markets to complement the existing global liquidity pools, he said.

Chinese Foreign Minister Wang Yi along with RBI Governor Raghuram Rajan is scheduled to atoned the ceremony.
(Published 26 February 2016, 13:19 IST)

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