The Asian Development Bank on Thursday indicated that it may be forced to lower its lending programme to developing countries such as India as investments are not yielding commensurate returns.
We have no solid base of capital to continue to lend at higher levels than before…We have now entered a level of lending of $10 billion compared to $5 or $6 billion before. But can we keep this level of lending? That itself is a challenge…, said Takehiko Nakao,president,ADB,said at the agencys 46th Annual General Meeting. According to his estimates,Asian countries require $8 trillion for infrastructure financing over the next 10 years,while the banks lending capacity is $10 trillion.
Addressing his first press conference since taking over the ADB chief post last month,Nakao further said,Because our income from investments of surplus resources,which is mostly lent to European countries,that return on investment is smaller than expected because of lower interest rates. So we hope to solve this issue of maintaining a sustainable lending level. We are working on this issue.
His comments are significant as India is the largest recipient of funds from the agency. In 2012,ADB extended $2.4 billion to India for projects in sectors including transport,energy,finance,commerce,industry and trade. But,despite challenges in funding,Nakao said that ADB would be interested in promoting a number of projects in India including the Delhi Mumbai Industrial Corridor,highways and rail projects.