Setting up BRICS bank not going to be easy: Takehiko Nakao

NEW DELHI: The Asian Development Bank ( ADB) on Thursday said that setting up the proposed development bank by BRICS (Brazil, Russia, India, China and South Africa) is not going to be easy as banking is a very 'complex' issue.

"Setting up banking business is not easy as it involves finding new projects, financing them and then monitoring the use of these funds and repayments," said new ADB President Takehiko Nakao, adding that ADB would, however, welcome the initiative, considering that there's huge investment requirement in emerging Asian economies.

"We are willing to cooperate as there's huge requirement of funds in emerging economies including India, particularly in infrastructure like roads, ports, airports that require $8 trillion investment in the next ten years," Nakao added.

It is widely feared that BRICS engagement with ADB would take a hit once its own development bank becomes operational in the next one year, considering that the five-member countries play a critical role in the Manila-based ADB.

Admitting that the scope of ADB for financing is restricted because of which maintaining the current levels of lending will be a challenge, the ADB chief said that governments across emerging countries should mobilise resources for infrastructure development through taxation and by mobilising the savings of the country besides encouraging private-public partnership across various infrastructure projects.

Heads of BRICS countries had met in Durban, South Africa, last month and decided to go ahead with setting up the development bank despite differences among member countries on the location of the bank.

While India, Brazil and South Africa have been campaigning to get the proposed bank headquarters located in their respective countries, China is pushing for a larger contribution by member-countries towards equity capital, leading to delay in the ambitious project, which is expected to meet a significant part of the investment requirements of emerging economies once it is set up.

The proposed BRICS development bank will be along the lines of existing multilateral financial institutions and will mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging economies.