Finance Minister Nirmala Sitharaman on Thursday extended India’s support to Asian Development Bank (ADB) to remove the charter lending limit from the ADB charter, and relocating the limitation to the Board of Directors-approved capital adequacy framework (CAF).
CAF is designed to protect the risk-bearing capacity of ADB without relying on callable capital, and to maintain ADB’s ability to lend even during crises and after a large non-accrual shock.
During her intervention in the Governors Plenary meeting of ADB on Thursday. Sitharaman also expressed hope the open discussions in the plenary will lead to common ground and resolution of many issues and provide the guidance to the bank.
During the discussions, ADB sought the Governors’ guidance on issues like risk appetite, callable capital, charter lending limit, hybrid capital and shareholder guarantees, which ADB has been examining as part of its review of the bank’s CAF.
“India encourages ADB to explore adopting an innovative, risk-factored approach for lending to the Developing Member Countries (DMC), taking into account the risk profile of countries backed by in-depth country diagnostics and analysis,” she said, while speaking on theme of ‘Boosting ADB’s Lending Capacity’.
The finance minister also met her Korean counterpart and deputy PM Choo Kyung-ho, and highlighted investment opportunities in India in manufacturing, food processing and marine resources. Sitharaman highlighted India’s enabling policy framework for e-vehicles and green hydrogen sectors to further attract investment in India.
Sitharaman further informed Kyung-ho about the newly identified projects under the EDCF Framework (Economic Development Cooperation Fund) Agreement, and expressed hope for their quicker implementation.
“Choo Kyung-ho said the two countries should continue to broaden cooperation and engagement, and that he hoped that Korea will get the opportunity to participate in the investment avenues in India,” the finance ministry tweeted.
Earlier in the day, while addressing the board of Governors, Sitharaman emphasised on the need for a robust ADB that adopts a transformational rather than incremental approach for sustainable and resilient regional development in the age of ‘resets’.
Speaking about the Indian economy, she said it is in a relatively stronger trajectory in spite of the prevailing economic uncertainties.
“We continue to focus on strategic and integrated infrastructure development driven by unprecedented capital expenditure and building economic competitiveness while integrating with global value chains,” she said.
Besides, she urged ADB to explain its plan for meeting its ambition with more concessional climate finance, especially to middle-income economies like India, whose economic progress is consistent with the pursuit of its net zero goal by 2070.
“I have noted ADB’s strong ambition to deliver climate financing to its developing member companies and the establishment of the Innovative Finance Facility for Climate in Asia and the Pacific (IF-CAP),” she said.
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