New Delhi: The board of governors of the five-member New Development Bank (NDB) will discuss expanding the membership of the multilateral institution at its second annual meeting beginning Friday in New Delhi, the bank’s president K.V. Kamath said on Thursday.
Kamath refused to discuss any potential candidates for joining the NDB. “Without the board giving a signal, we cannot proceed (to include new members),” he said.
Asked whether it was too early to include new members, Kamath said: “That is a call the board of governors will have to take. Let them discuss and take a call.”
NDB is a development bank set up in 2014 by the five emerging economies grouped under BRICS (Brazil, Russia, India, China and South Africa) to challenge existing multilateral financial institutions like the World Bank and the International Monetary Fund which are dominated by developed countries.
While the bank is based in Shanghai, China, India got to appoint its first president.
Kamath said NDB will issue masala bonds (rupee-denominated bonds sold overseas) in the second half of the current calendar year. “We are looking at anywhere between $300 to $500 million amount. But we have not decided yet in which geography the bonds will be issued,” he added.
NDB has lent $250 million through Canara Bank for renewable energy projects and another $350 million to Madhya Pradesh for a road project.
“Last year we had lent a $1.5 billion in total. This year, we are planning to lend $2.5-3 billion. I think India’s share will be in the range of $600-700 million,” Kamath said.
The European Investment Bank (EIB), the largest development bank in terms of lending, is opening its first branch in India on Friday. Asked whether EIB will have an upper hand in India because of its local presence, Kamath said the need for infrastructure development is so large that all multilateral banks manage to barely meet 10% of the potential.
He said NDB does not have any immediate plans to open a branch in India. “We are going to open our African regional centre very quickly. After that, we will look at other venues,” Kamath said.
In the absence of a local office, an NDB team comes from Shanghai for project evaluations at various locations. “That is actually the easier way because these are specialist activities,” he said.
EIB vice-president Andrew McDowell, said that one of the challenges before multilateral banks is to try and adopt common standards and common definitions. “In India, we need to cooperate. We can work on country standards. But doing one common standard across countries might not be feasible,” he said.
On whether NDB will co-finance projects with other multilateral banks like Asian Infrastructure Investment Bank and EIB, Kamath said NDB will certainly seek to jointly finance projects at a future date. “We have now signed memorandums of understanding (MoU) with almost all multilateral development banks. We will sign MoU with EIB during this annual meeting. There is clearly scope to work together.”
On financing non-sovereign projects, Kamath said NDB’s policy allows it to invest 30% of its corpus in non-sovereign operations. “We will look at innovative financing, private sector financing down the road,” he added.
On the Goods and Services Tax Bills that were passed by the Lok Sabha on Wednesday, Kamath said the proposed tax may add more than a percentage point to India’s growth rate, as has been widely articulated by analysts. “There is a whole digitisation process due to GST as well as after demonetisation. We will see a much more efficient system than that exists today.”