02 June 2016 Current Affairs: The New Development Bank (NDB) of the BRICS countries is set to issue its first yuan-denominated bonds with plans to release more bonds in local currencies including in Indian Rupee.
The Shanghai-based bank founded by Brazil, Russia, India, China and South Africa (BRICS) and headed by eminent Indian banker K V Kamath plans to finance sustainable development projects in the emerging markets and developing countries.
The bank’s first five-year yuan-denominated bonds, also referred as green bonds, will be issued after receiving a rating from international ratings agencies as well as getting authorities’ approval, said Paolu Nogueira Batista, the bank’s vice president for economic research, strategy and partnerships and chief risk officer.
More bonds denominated in local currencies of the BRICS countries, including the rupees in India, will be issued if the bank’s board and local authorities endorse the project plans, he said while outlining bank’s plans on Monday at the closing ceremony of the Shanghai Forum, an annual meeting of officials, academics, business chiefs and world opinion leaders, state-run ‘China Daily’ reported.
The New Development Bank is established with initial subscribed capital of USD 50 billion with total paid-in capital of USD 10 billion. The founding members of the NDB have already brought in capital of USD one billion as initial contribution.
The bank announced its first batch of loans on April 16, providing USD 300 million to Brazil, USD 81 million to China, USD 250 million to India and USD 180 million to South Africa.Together with the China-backed Asian Infrastructure Investment Bank (AIIB), the NDB was expected to contribute to infrastructure development, specially in the Asian region along with IMF, World Bank and Asian Development Bank.
India is the only country among the BRICS countries whose GDP continues to grow above seven per cent while the rest of the economies including that of China reported sharp slowdown.Chinese economy slipped to 6.9 per cent last year.
The NDB aims to be a global lender instead of being limited to being an institution for just a handful of countries, Batista said.
It wants to expand and be involved in more countries in the future, on condition that the emerging markets and developing countries take a majority of shares and voting rights in the bank