Multilateral Institutions Division
ADB'S Interface with India - Brief Overview
- To maximise access and leverage of Multilateral Financial Institution's (MFI's)/Multilateral Development Bank's (MDBs') knowledge base, international experience and familiarity with best practices and to make best use of limited external resources available, a set of principles and a "Finance Plus(515 KB) " criteria to govern the selection of projects to be posed to these agencies including Asian Development Bank have been instituted. These "Finance Plus" principles have been circulated vide circular dated September 1, 2011.
- Measures for rationalisation of pipeline projects for proper management have been instituted. These measures include minimum counterpart funding, co-financing and innovative financing and circulated vide letter dated December 14, 2011. Please refer Review and Rationalization of new Projects(164 KB)
- A procedure for posing projects to MDBs including ADB has been developed. Please refer Para-III.
- Year 2011 marked 25th year of the ADB's lending operations in India. A commemorative event to mark 25th Anniversary of India-ADB partnership was held on 17th October, 2011 which included an Eminent Persons' Forum. Hon'ble Finance Minister inaugurated the event. The objective of the discussion was to bring together Asian policy makers, thinkers and experts to New Delhi to reflect on Asia's emergence as a vibrant economic and financial region in the global arena. ADB Publications titled "India-ADB Development Partnership(10 MB) " and "Facilitating Infrastructure Development in India(4 MB) ". were released on the occasion. The event has been widely appreciated in Media and Govt. circles
Private Sector Operations
- ADB's non-sovereign operations in the country are coordinated by its Private Sector Operations Division. With India's increased pace towards infrastructure development through the PPP mode, ADB's non-sovereign operations need to be stepped up through financing private infrastructure projects without in anyway diminishing its engagement with the public sector. We have emphasized that while we support increase in non-sovereign lending, it cannot be at the cost of Public sector projects. Both must grow apace, with non-sovereign lending taking a major share of additional resources that are mobilized.
- ADB offers following Products under its non-sovereign operations :
- Loans - ADB offers senior and subordinated debt, as well as mezzanine financing. In India, ADB also offers local currency loans on a case to case basis. Interest rates and other terms vary, depending on a company's or project's needs and risks.
- Equity investments - ADB offers financing through equity investments, including direct equity investments in the form of common shares, preferred stock, or convertibles. Once its objectives have been achieved, ADB will divest its shares at a fair market price. ADB also invests indirectly in projects in its priority areas through private equity funds, up to certain exposure limits and ordinarily stays invested through the life of the fund.
- Guarantees - ADB provides guarantees that can be used to cover political risks, and more comprehensively, both political and credit risks.
- B-loan/Lender of record - ADB can mobilize additional debt resources for a financing through an arrangement in the form of a B-loan/Lender of Record structure. Since the withdrawal of the exemption from withholding tax benefit for the B-Loan cofinanciers, this product has not been used in India.
- Local Currency Lending -In order to widen the funding of resources for infrastructure projects, ADB has been seeking Government of India's (GoI) approval for raising resources through the local currency loan (LCL) route. In 2004, ADB made their first representation for LCL by raising Rupee Bonds in the India market on terms and conditions prescribed by RBI. GoI approved issuance of Rupee Bonds for an amount of Rs. 5 billion with a maturity of at least 10 years subject to stipulated conditions. In 2005, GoI again approved raising of Rupee Bonds for an amount not exceeding Rs. 15 billion for a minimum maturity of 05 years for lending to infrastructure projects. In 2007, GoI has accorded approval for Rupee financing of Rs.29.75 billion to ADB to fund domestic infrastructure through the currency swap route for a maturity of more than 10 years subject to some conditions. RBI has also allowed 25% of the funds raised to be used for lending through select intermediary FIs involved in financing infrastructure projects.
- As on 30.06.2012, ADB local currency lending is as follows:
MONITORING OF THE PROJECTS
- Tripartite Review Meetings (TPRM) - In order to streamline issues and closely monitor the disbursements as also provide advice and for troubleshooting difficult and ticklish problems, a system of Tripartite Portfolio Review Meetings had been initiated at the level of Joint Secretary in which the executing agencies and the ADB participate. These Tripartite Portfolio Review Meetings are held thrice a year. Nodal officers have been appointed in each of the States who cater to all ADB Projects and are in regular correspondence with DEA. The ADB have lauded the efforts of the Government of India and have included this in the list of International Best Practices.
- State Level Reviews under chairmanship of Chief Secretary of the State with JS(MI) on all EAPs.
- Sector level review with Secretary of Line Ministry and JS(MI).
- Project Readiness Checklist : - DEA and ADB have now formalised a 'Project Readiness Checklist(23 KB) ' which is being adhered to. This ensures adequate preparedness of projects before implementation
- Visit to Project sites by DEA officers: - DEA officers would be visiting the project sites for monitoring and evaluation of the progress of the implementation of the projects. Parameters for appraisal of Project Implementation Progress(188 KB) have been devised to get the status of the projects.
- Regular Wrap-up meetings of project review missions, in which line Ministries are invited and in some cases Executing Agencies are also called. This is done at the level of Director. During these meetings, detailed review of procurement related issues, issues related to relief & resettlement, project monitoring units, audit & accounting and other miscellaneous factors impacting the project are done. Follow up with EAs is done through confirmation of Aide Memoire (AM) submitted of the mission.
| 9 |