Washington: The New Development Bank, the latest multilateral funding institution in the financial world, has sanctioned a $250-million loan for India to fund its ambitious scheme on new and renewable energy, a top finance ministry official has said.
The grouping of Brazil, Russia, India, China and South Africa (BRICS) -- which set up the multilateral development financing institution with headquarters in Shanghai -- has also now decided to look at the prospect of a new academic institute and a ratings agency under the bank's supervision.
"Participated in meetings of BRICS finance ministers and Board of Governors of the New Development Bank. Major policy issues discussed," India's Secretary for Economic Affairs Shaktikanta Das tweeted.
"New Development Bank sanctioned four loans, including a loan of $250 million for a renewable energy scheme in India. Good beginning," Das said after the meeting that was chaired by Finance Minister Arun Jaitley here.
This, according to officials, is in the area of solar energy and is also the first such loan from the development financial institution.
A statement from the Indian side later said the multi-tranche, $250-million loan will be given to Canara Bank to, in turn, lend to renewable energy projects. "The projects will result in generation of 500 MW of renewal energy and savings of about 800,000 tonnes of carbon emissions," the statement said.
In total, $811 million loans have been approved for projects in India, China, Brazil and South Africa.
Now into its second year, the New Development Bank, with noted Indian banker K.V. Kamath as president, was formed by the BRICS leadership to fund infrastructure projects in emerging economies, as also to meet the aspirations of hundreds of millions of people through sustainable development.
The BRICS finance ministers and central bank governors' engagement here was on the margins of the World Bank-International Monetary Fund Spring meetings. Besides Das, Jaitley's delegation includes Reserve Bank of India Governor Raghuram Rajan and Chief Economic Advisor Arvind Subramanian.
During the meetings, Jaitley said even though India has consistently recorded the highest growth figures among large economies for the last three quarters, the global growth continues to remain sluggish and has witnessed recurring downward revisions.
"Weak demand, tighter financial markets, softening trade and volatile capital flows are key headwinds to robust global recovery. Further, the efficacy of monetary policy instruments has reached its limits and that its pass through has not been seamless," he said.
"Global and regional financial safety net and oversight need to be augmented -- including new financing mechanisms," he said, emphasising the need for globally coordinated policy actions to address the persistent economic turbulence.
At the BRICS meeting, which he chaired, Jaitley raised issues of common concern of member countries -- global economy, structural reforms, voice reform of IMF and the World Bank and other new and ongoing initiatives.
He also expressed satisfaction that two key initiatives of BRICS -- the Contingent Reserve Arrangement and the New Development Bank -- were both fully operational. Deliberations were were also held on the efficacy of establishment of New Development Bank Institute and BRICS rating agency.
"It was decided that a technical working group would examine the issues in detail and present their findings to the BRICS Finance Ministers and Central Bank Governors in their next meeting."