New Development Bank inks deal with ICICI Bank for business partnership
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Posted on:06 May 2016 12:41:41
06 May 2016 Current Affairs: New Development Bank (NDB), which is headed by K V Kamath, has chosen his former organisation ICICI Bank for its first tie-up with any bank in India to explore opportunities around bond issuances, co-financing, treasury management and human resources.
The two lenders announced they have signed a Memorandum of Understand (MoU) according to which they would consider each other as “preferred partners” to work in the aforementioned areas.
BRICS NDB won’t be the first multi-lateral funding agency that is looking at tapping the rupee-denominated bond market. Recently, IFC, part of the World Bank group, also raised about Rs 180 crore by issuing rupee-denominated 'Maharaja' bonds.
Apart from this, the two lenders will also be working together to fund development projects in the country. In fact, in 2014, the leaders of the BRICS (Brazil, Russia, India, China and South Africa) countries had decided to establish NDB with the intention to fund infrastructure projects.
Our mandate prescribes partnering with local development banks in member countries and this MoU will enable NDB to leverage the deep market access and insight of ICICI Bank in India's financial markets.Another area where the two banks will be collaborating will be around treasury risk management, account and cash management services and human resource development. However, the banks failed to divulge more details on the nature of partnership or the financial transactions between the two that will be a result of this collaboration.
NDB has already inked a similar pact with BNDES Bank of Brazil. Last month (in April 2016) newly established BRICS New Development Bank granted a $250 million funding to Canara Bank for a renewable energy project. The China-based NDB has approved four green renewable energy projects from India, China, Brazil and South Africa entailing Bank financing of $811 million.
The project from India entails provisioning of a multi-tranche loan of $250 million to Canara Bank for lending to renewable energy ventures. The project will result in generation of 500 MWs of renewable energy and savings of about 800,000 tonnes of carbon emissions.
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