Finance Minister Nirmala Sitharaman said on Thursday that India encourages the Asian Development Bank to explore adopting an innovative, risk-factored approach for lending to its developing member countries.
During her intervention in the Governors Plenary meeting of ADB, she expressed India's support for removing the charter lending limit from the ADB Charter altogether and relocating the limitation to the Board of Directors-approved Capital Adequacy Framework.
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.
Sitharaman, representing India as Governor in the 56th ADB Annual Meeting, expressed hope that the open discussions in the plenary will lead to common ground and resolution of many issues and provide appropriate guidance to the bank.
'India encourages ADB to explore adopting an innovative, risk-factored approach for lending to the DMCs, taking into account the risk profile of countries backed by in-depth country diagnostics and analysis,' she said while speaking on the theme of 'Boosting ADB's Lending Capacity'.
During the discussions, ADB sought the Governors' guidance on issues like risk appetite, callable capital, charter lending limits, hybrid capital, and shareholder guarantees, which ADB has been examining as part of its review of the Bank's Capital Adequacy Framework.
Earlier in the day, Sitharaman, while addressing the board of governors, had emphasised the need for a robust ADB that adopts a transformational rather than incremental approach for sustainable and resilient regional development.
Highlighting that the world is passing through an age of "resets"—of fuel, food, fertiliser, debt, energy, supply chain, sustainability, fiscal stability, etc.—she said, "We need a robust ADB that adopts a transformational rather than incremental approach for sustainable and resilient regional development'.
India is the founding member as well as the fourth-largest shareholder of the multilateral funding agency founded in 1966 with a vision to foster a prosperous, inclusive, sustainable Asia-Pacific region.
In the post-Covid world, she said, people's aspiration for sustained development finance across developing member countries needs ADB's alignment to more resources and operational efficiencies.
Therefore, in both the sovereign and private sectors, renewed engagement is imperative, she said.
While continuing to focus on its core agenda of poverty reduction and development of low-income countries, ADB should also focus on global public goods in their regional dimension.
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