Incheon: Multilateral lending agency ADB is looking at the possibility of raising fresh rupee denominated bond to avoid foreign exchange risk, its president Masatsugu Asakawa said on Tuesday.
Asian Development Bank (ADB) proposes to lend up to USD 25 billion in the next five years till 2027 to fund India’s infrastructure building as well as green projects. The proposal is likely to be taken up for approval by the ADB Board.
“We are encouraged to increase our local currency financing to avoid any kind of foreign exchange risk,” Asakawa said ahead of the 56th annual meeting of ADB Board of Governors. The meeting would be attended by finance minister Nirmala Sitharaman.
Raising funds in local currency reduces forex volatility, he told reporters here.
ADB, which provides significant assistance to India, had raised funds in rupee denominated bonds or masala bonds to finance projects in the country.
The ADB had earlier raised Rs 850 crore (USD 118 million) through Indian rupee-linked 10-year bonds.
“India has the largest requirements (for funds) in South Asia right now. In my conversation with Prime Minister Narendra Modi during the bilateral meetings, PM Modi emphasised the importance of continuous construction of infra and renewable energy,” he said.
Asakawa had conveyed to PM Modi during his visit in February that ADB’s intention to provide USD 20 billion – USD 25 billion resources over 5 years was to advance the country’s aspirations for fast, inclusive, and green growth.
Stressing that India is the fastest growing large economy, Asakawa said, India’s economic growth will be beneficial for the entire South Asian region, including countries like Sri Lanka and Pakistan, that were facing food and energy crises.
Meanwhile, Sitharaman, who reached South Korea on Tuesday, held a bilateral meeting with Asakawa. She also met Samsung Electronics Global CFO Hark Kyu Park and representatives of major business conglomerates related to marine products processing in Incheon. She also addressed the Indian diaspora in Seoul.
During her meeting with the ADB president, the minister urged the multilateral funding agency to support India with more concessional climate finance, saying that the country’s economic progress can have huge positive impact regionally and globally.
She advised ADB to introspect and assess how the bank can effectively support developing member countries.
Asakawa during the meeting reiterated ADB’s commitment of providing USD 100 billion climate finance to its member countries and also thanked India for support to ADB’s innovative finance facility for climate in Asia and the Pacific.
ADB started operations in India in 1986. As of December 31, 2022, it had committed USD 52.28 billion in sovereign lending in the country and USD 6.75 billion in non-sovereign lending and investment. ADB’s current India portfolio comprises 64 projects worth about USD 16 billion across the transport, urban, energy, human development, agriculture and natural resources, and finance sectors.
In her address to the diaspora, Sitharaman talked about India’s growing global stature.
She said India is being noticed worldwide not just because it is the fastest-growing large economy — this year as well as the coming year — but also because of the way in which it has handled the pandemic and economic revival.
She also invited NRIs settled in South Korea to contribute to developments taking place in India in the fields of technology and innovation.
The minister also said that the G20 Presidency has come at a crucial stage to the emerging economies — Indonesia, India and Brazil (G20 troika), stressing that three years are critical for the global economy, which is going through a reset.
While the advanced economies today are looking at a long-drawn recession, central banks in those countries are raising interest rates and dealing with inflation, it is essential for emerging economies to become growth engines and help in resolving challenges facing the world, Sitharaman said.
In her meeting with major business houses in marine products processing, the minister apprised them of the various aspects of the ‘Blue Economy’ which the Indian government is supporting through investor friendly policies.
“The delegation of Korean entrepreneurs showed keen interest in taking up investment in India in these sectors,” a finance ministry tweet said. PTI DP JD CS.
The PTI correspondent is in South Korea on invitation of the Asian Development Bank (ADB)..
