ADB chief shrugs off threat of BRICS bank

In the backdrop of the debate on setting up a development bank promoted jointly by top emerging market economies to serve their special needs, the Asian Development Bank President Takehiko Nakao had a word of advice. Running a bank is not an easy job, it requires finding good projects, monitoring implementation while maintaining sustainability and meeting environment challenges, he said on the opening day of the ADB Annual meet in Noida, east of New Delhi.

India is hosting ADB's 46th Annual Meeting.  

Top emerging markets, Brazil, Russia, China, India and South Africa, are part of the so-called BRICS grouping. Their leaders have, in principle, accepted the idea of jointly starting a development bank.

According to Nakao, ADB does not look at the proposed BRICS bank as a threat. In fact, ADB looks for opportunities to support and cooperate with this new bank, if it manages to see light of the day in 2014 edition of BRICS nations at Brazil.

The proposed BRICS bank has to deal with challenges before it starts. Two of the important stakeholders at ADB, India and China, are also playing key role in pushing this new bank. The political issues between these countries on account of unresolved border disputes spill over into ADB's functioning. China has in the past opposed ADB loans to projects located in India's Arunachal Pradesh as it claims the state is disputed territory. The situation has only worsened over the years.

ADB president Takehiko Nakao, who is in India for ADB's 46th Annual Meeting, says that they would not have to change the strategy and business model even if this bank comes into existence.

Meanwhile, he added that the bank lent $10 billion dollars in last year, out of which $2.4 billion was towards India. He said that since interest rates are down in most of the economies, it would be difficult to expand the corpus of loans of $10 billion.