'New Development Bank to set its own standards; no rivalry with others'

The new bank, set up by India and four other members of the BRICS grouping, will strive to approve its first loan before end of the current fiscal

Source: PTI

BRICS The Prime Minister, Narendra Modi in bilateral meeting with the President of Russian Federation, Vladimir Putin, at Congress Hall, in Ufa, Russia on July 08, 2015. Source: PIB, Government of India

  Setting "ambitious targets" for himself as the first chief of $100-billion New Development Bank (NDB), eminent banker K V Kamath today said it will bring about a change in the way multilateral banks function but there is no question of any "rivalry" with them. Kamath also said that the new bank, set up by India and four other members of the BRICS grouping, will strive to approve its first loan before end of the current fiscal. Stating that funding requirements are huge at $1-2 trillion for each BRICS country, including India, Kamath said he sees other multilateral lending institutions such as IMF, World Bank and Asian Development Bank (ADB) as "partners, not rivals" in working for growth of the developing world. Kamath, 67, has been given a five-year term as the first President of NDB, which the five BRICS nations (Brazil, Russia, India, China and South Africa) had agreed to set up last year. The bank, which will have its headquarters in Shanghai, held its Board of Governors meeting yesterday in Moscow and completed its ratification process. The meeting was held a day before the seventh BRICS Summit that began here today. The Summit will be attended by heads of states of all the five BRICS nations, including Prime Minister Narendra Modi. During the Summit, the leaders of the five BRICS countries will decide on the future course of action for the new bank. The NDB is being touted as a major alternative to other multilateral institutions and its $100-billion Contingent Reserve will also help the member countries draw funds in times of short-term liquidity requirements. "There are parallels with other multilateral institutions, but we will set our own standards at the New Development Bank," Kamath told PTI in an interview. Asked how much the new bank would be able to contribute to the funding requirement of India where infrastructure investment itself was pegged at over $1 trillion, Kamath said, "The requirements of India and the other developing countries are so large." "It will require a lot of cooperation and collaboration with other partners. These partners could be Asian Development Bank (ADB) and other multilateral institutions," said Kamath under whose leadership top private sector lender ICICI Bank transformed banking industry in India. Kamath said the requirements for the infrastructure sector in India and several other emerging markets are huge -- in the range of $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 said. Asked whether he sees a rivalry or complementary roles for NDB and other multilateral institutions, Kamath said, "There will be no competition at all. The market is big enough for all of us. We all will be major partners in the development of India and other developing markets." On his focus areas as the first President, Kamath said, "Innovation is something that we will try to bring about in the working of the multilateral banks. "One of the areas that we will focus is that lenders want the borrowers to follow a certain timeline. We need to see what innovation is required to ensure that this timeline is met or to try and reduce this timeline. "We will look at product innovation, resource innovation, the delivery innovation and the most importantly the process innovation. We will look to bring in innovation in the entire process followed in the working of a multilateral bank. "I know that it is a very ambitious target, but I am sure we will meet this target and the best thing for us is that we are starting on a clean slate and we do not have any past record to follow." "My first target is that by April 1, 2016 we will approve our first loan." "The Board of Governors of NDB held its first meeting yesterday and the Board approved the legal framework to complete the ratification process for setting up of this bank. "The ratification process is complete now and I'll formally take charge of the Bank in Shanghai on July 20," Kamath said.    

July 8, 2015 | 8:27 pm IST.

The Dollar Business Bureau - Jul 08, 2015 12:00 IST