President’s Desk
ET Q&A – What Started Off as a Startup is Now a Functioning Bank
KV KAMATH PRESIDENT, NEW DEVELOPMENT BANK
BRICS Bank’s focus is on infrastructure, sustainable activity and green energy, says veteran banker
The New Development Bank, or BRICS Bank as it is popularly called, is in its second year of operation. The bank’s board is meeting in Delhi over the weekend. Veteran banker KV Kamath, who heads the bank, spoke to ET’s Vinay Pandey on the progress made by the new bank and how he sees the Indian economy. Edited excerpts
When the BRICS Bank was announced, the narrative was that this was being promoted as an alternative to the existing multilateral set up. How has that narrative played out?
— It is an initiative that the BRICS nations took, which to me in a larger context was five countries from the south which were traversing through the development paradigm came together and said we will try to build an institution on our own. To properly reflect its context, they gave the name the New Development Bank. One year down the road, I would think the objectives that we had started off with, we are on the road to meeting them. We need to build the strength at the ground level. I think that strength has now been built. Then you need to build execution capability. We have built that. What was a startup is now a functioning bank.
In terms of lending what kind of ambition does the bank have?
— Our focus basically is around the infrastructure space, sustainability being a key and green being a key. In the first year, the focus was on green energy and slowly expanding it to other areas of sustainable activity. We will stay within this core set of activities.We did about a billion and half in US dollar in lending in the first year. Our target is to do between two and half and three billion this year and scale up the human capacity and at the same time the lending capacity of the bank for this year and year forward.
One of the big appeals of this bank as we saw in India was that India and other developing countries will get access to Chinese surplus capital without the security concerns that are raised through bilateral route. How do you read that story?
— In running of the bank, I don’t think there is this equation at all. We run the bank as a professional institution, five founder members, and whatever we try to do we do through a board decision to actually fund a project. We run like a true global bank.
You have the mandate to expand beyond the five countries. We see AIIB has already done. Do you see yourself taking on more members?
— In our case, clearly the initial thoughts of the founding members were to keep it to BRICS countries which all came with equal shares. Any membership expansion is something for the board of governors to consider and approve.
How do you see the BJP’s recent election victory in UP, which has raised expectations of a faster pace of reforms? GST bills have already been passed.
— As I see it, any government’s ability to pass what it needs for a reforms process and its ability to push that through, I think is a big plus to an economy. Probably, this victory will give the government the momentum required to get a whole lot of things done.
Photo: Reuters
What would be in your view the key reforms that need to be done going ahead?
— The key growth engine for this country at our stage of development is going to be infrastructure, infrastructure coupled with retail side of the economy will be a key driver. Actions taken on the agriculture side again will sustain whole lot of activity in the country.
How would you assess these three years of the government and how do you see things going ahead?
— Three years were trying to get the economy respinning at pace and I would think that part of it is done. Now the opportunity is to drive it at even a faster pace. That should happen starting from now onwards though the slight challenge is going to be weakness in some parts of the private sector, some parts of the banking sector. Urgency to fix these quickly and set a tight timeline, I think then the economy should be firing on all cylinders.
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We hear lot of noise in terms of social tensions, Hindutva, etc. Is this just here or globally too it is noticed?
— I don’t hear the noise where I am in this context. It doesn’t get reflected globally. Where I sit, India is still looked at as the brightest spot among comity of large economies.
If you were to pin down what is it that makes India a bright spot, what would you say?
— What I find now is the large infrastructure gap in the country which can be very productively filled. The act of filling it itself will generate economic development. And, the fruits of this investment will bear returns for next twenty-thirty years. I think this is the most exciting thing to me about India. It’s a vast country with vast opportunities, vast gaps.