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DAILY NEWS ANALYSIS

  • 16 November, 2021

  • 15 Min Read

Asian Development Bank (ADB)

  • Asian Development Bank (ADB) is a regional development bank established on 19 December 1966.
  • The Headquarters of ADB is in the Ortigas Center located in the city of Mandaluyong, Metro Manila, Philippines.
  • India is a founding member of the Asian Development Bank (ADB).
  • It aims to promote social and economic development in Asia and the Pacific.

Members of Asian Development Bank (ADB)

  • The bank admits the members of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP, formerly the Economic Commission for Asia and the Far East or ECAFE) and non-regional developed countries.
  • From 31 members at its establishment, ADB now has 68 members.
  • The ADB was modelled closely on the World Bank, and has a similar weighted voting system where votes are distributed in proportion with members' capital subscriptions.
  • ADB releases an annual report called Asian Development Outlook that summarizes its operations, budget and other materials for review by the public. ADB is an official United Nations Observer. https://www.aspireias.com/daily-news-analysis-current-affairs/Asian-Development-Outlook-ADO
  • As of 31 December 2016, Japan holds the largest proportion of shares at 15.677%, closely followed by United States with 15.567% capital share. China holds 6.473%, India holds 6.359%, and Australia holds 5.812%.

Roles and functions of Asian Development Bank (ADB)

  • ADB defines itself as a social development organization that is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration.
  • This is carried out through investments – in the form of loans, grants and information sharing – in infrastructure, health care services, financial and public administration systems, helping nations prepare for the impact of climate change or better manage their natural resources, as well as other areas.

Masala Bonds and ADB

  • Asian Development Bank (ADB) has listed its 10-year masala bonds worth Rs.850 crore on the global debt listing platform of India INX (BSE-owned exchange).

What are masala bonds?

  • Masala Bonds are rupee-denominated bonds i.e the funds would be raised from overseas market in Indian rupees.
  • Any corporate, body corporate and Indian bank is eligible to issue Rupee denominated bonds overseas.
  • Conditions of Masala Bonds:
  1. RBI mandates that the money raised through such bonds cannot be used for real estate activities other than for development of integrated township or affordable housing projects.
  2. It also can’t be used for investing in capital markets, purchase of land and on-lending to other entities for such activities as stated above.

About the move and its significance

  • The proceeds would be used to support local currency lending and investment in India.
  • ADB’s masala bonds are listed on both Luxembourg exchange and India INX.
  • This is the first time a foreign issuer and a supranational is doing a primary listing with India INX. This will help further in making GIFT IFSC (Gujarat International Finance Tec-City -- International Financial Services Centre) a global hub for fund raising by Indian and Foreign issuers.

COVID 19 and Asian Development Bank (ADB)

  • The Asian Development Bank has approved 1.5 billion dollars loan to India to help fund its fight against coronavirus pandemic.
  • The loan has been sanctioned with a view to support immediate priorities such as disease containment and prevention, as well as social protection for the poor and economically vulnerable sections. The quick-disbursing fund is part of a larger package of support that ADB will provide in close coordination with the government and other development partners.

Why in news?

  • The Asian Development Bank (ADB) and the Government of India today signed a $300 million loan as additional financing to scale up improvement of rural connectivity to help boost rural economy in the state of Maharashtra.
  • The Government of India and Asian Development Bank (ADB) today signed a $112 million loan to develop water supply infrastructure and strengthen capacities of urban local bodies (ULBs) for improved service delivery in four towns in the state of Jharkhand.

Source: PIB


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