A year after it marked its formal presence as a multilateral bank, the New Development Bank (NDB) of the Brazil-Russia-India-China-South Africa (BRICS) grouping has developed a defining brand identity — of a pronounced eco-friendly lender of the emerging countries. The bank has so far funded five projects for each of its members, all related to renewable energy. For instance, India’s Canara Bank has received $250 million that would be channeled to develop 500 MW of renewable energy. Brazil will develop 600 MW of renewable energy from a funding of $300 million. Similarly clean energy is the focus of lending to China, Russia and South Africa.
“We are inclined to fund projects which conform to high environmental standards, including those in the field of infrastructure, such as energy, railways and highways in the future. Sustainable development, which means a heavy focus on environmental protection is part of our mandate” says Leslie Maasdorp, vice president and Chief Financial Officer of the NDB, in a conversation with The Hindu. On Tuesday, the NDB reinforced its eco-centric credentials by issuing its first Green Financial Bond worth 3 billion Yuan, in the Chinese Interbank Bond Market. K.V. Kamath, the president of NDB pointed out that the response to the bond issue shows that that “in addition to accessing global capital markets, considerable scope exists for the NDB to raise funding from local capital markets of the BRICS member countries.”
Gopal Balachandran of the NDB told The Hindu that raising funds in local currencies of the BRICS member countries was essential to lower the bank’s borrowing costs, thereby keeping the lending rates competitive. The funds resulting from the bond issue would be used for infrastructure and sustainable development projects in the BRICS that conform to the green guidelines set out by the People’s Bank of China (PBOC) in December 2015, Mr. Kamath observed. In his address at the first annual meeting of the NDB, Mr. Kamath also underscored, the challenge posed to the NDB by the new demands of the internet based digital economy.
Yet, as it plans for its future, the NDB would have to confront three major challenges, says Luis Antonio Balduino Carneiro, Chairman of the Board of Directors of the NDB. He points out that bank had made its first loan mainly to public sector organsations. Consequently, it would have to learn to lend for private sector projects. He pointed out that working out co-financing g agreements with other lenders would be important as infrastructure funding requires large amount of funds which a single institutions would find difficult to finance. The expansion of the NDB with the inclusion of the new members would be another task that the NDB would have to address in the future.
“We are now growing up. Shedding a startup mentality, we now see ourselves as full grown player,” says Alexey Kosarev, head of corporate communications at NDB.