DEVELOPMENT BANKS

INTRODUCTION:
 Development banks are specialized financial institutions. They provide medium and
long-term finance to the industrial and agricultural sector. They provide finance to
both private and public sector. Development banks are multipurpose financial
institutions. They do term lending, investment in securities and other activities. They
even promote saving and investment habit in the public.
 In General sense,
"Development banks are those financial institutions whose prime goal
(motive) is to finance the primary (basic) needs of the society. Such funding results
in the growth and development of social and economic sectors of the nation.
However, needs of the society vary from region to region due to differences seen in
its communal structure, economy and other aspects?"
 ASIAN DEVELOPMENT BANK
Origin:
 The Asian Development Bank (ADB) is a regional development
bank established on 19 December 1966,[3] which is headquartered in
the Ortigas Center located in the city of Mandaluyong, Metro
Manila, Philippines. The company also maintains 31 field offices around the
world[4] to promote social and economic development in Asia. 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.[5] From 31 members at its establishment, ADB now has 67
members, of which 48 are from within Asia and the Pacific and 19 from
outside
 Organization
 The highest policy-making body of the bank is the Board of Governors, composed of one
representative from each member state.
 The Board of Governors, in turn, elect among themselves the twelve members of the Board of
Directors and their deputies.
 Eight of the twelve members come from regional (Asia-Pacific) members while the others come
from non-regional members.[10]
 The Board of Governors also elect the bank's president, who is the chairperson of the Board of
Directors and manages ADB. The president has a term of office lasting five years, and may be
reelected.
 Traditionally, and because Japan is one of the largest shareholders of the bank, the president has
always been Japanese.The current president is Takehiko Nakao, who succeeded Haruhiko
Kuroda in 2013.[11]
 The headquarters of the bank is at 6 ADB Avenue, Mandaluyong, Metro
Manila, Philippines,[12][13] and it has 31 field offices in Asia and the Pacific and representative
offices in Washington, Frankfurt, Tokyo and Sydney. The bank employs about 3,000 people,
representing 60 of its 67 members.
Objectives and activities
Aim
 The 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.
Focus areas
 Eighty percent of ADB’s lending is concentrated public sector lending in five
operational areas.[18]
 Education – Most developing countries in Asia and the Pacific have earned high marks
for a dramatic rise in primary education enrollment rates in the last three decades, but
daunting challenges remain, threatening economic and social growth.[19]
 Environment, Climate Change, and Disaster Risk Management – Environmental
sustainability is a prerequisite for economic growth and poverty reduction in Asia and
the Pacific.[20]
 Objective and Activities (Continued….)
 Finance Sector Development – The financial system is the lifeline of a country’s economy. It creates
prosperity that can be shared throughout society and benefit the poorest and most vulnerable people.
Financial sector and capital market development, including microfinance, small and medium-sized
enterprises, and regulatory reforms, is vital to decreasing poverty in Asia and the Pacific.
 Infrastructure, including transport[22] and communications,[23] energy,[24] water supply and
sanitation,[25] and urban development.[26]
 Regional Cooperation and Integration – Regional cooperation and integration (RCI) was
introduced by President Kuroda when he joined the ADB in 2004. It was seen as a long-standing
priority of the Japanese government as a process by which national economies become more
regionally connected. It plays a critical role in accelerating economic growth, reducing poverty and
economic disparity, raising productivity and employment, and strengthening institutions.[27]
 Private Sector Lending – This priority was introduced into the ADB's activities at the insistence of
the Reagan Administration. However, that effort was never a true priority until the administration of
President Tadeo Chino who in turn brought in a seasoned American banker – Robert Bestani. From
then on, the Private Sector Operations Department (PSOD) grew at a very rapid pace, growing from
the smallest financing unit of the ADB to the largest in terms of financing volume.
 Asian Development Bank and Pakistan:
 ADB helps address Pakistan’s development needs for energy, transport, agriculture,
natural resources, rural development, water supply, urban infrastructure and
services, public sector management, and finance.
 Pakistan was a founding member of ADB in 1966. The government has since worked
with ADB to strengthen the country’s key infrastructure, social services, and economic
growth. ADB has approved $32.1 billion in project assistance for Pakistan.
 Under the country partnership strategy, 2015–2019 and the country operations business
plan, 2018 -2020, ADB is committed to ensuring high, sustained, and inclusive growth
for Pakistan. The new business plan shows that the country’s sovereign operations will be
increased significantly to $7.1 billion over the next 3 years. Along with its continued
focus on energy, infrastructure, and institutional reforms, ADB will reengage in education
and health.
 To improve Pakistan’s competitiveness and fiscal sustainability, ADB will continue to
help the government manage external debt and the balance of payments, and maintain the
momentum of macroeconomic and structural reforms to support economic stability and
expansion.
ADB-PAKISTAN Partnership strategy
 The country partnership strategy (CPS), 2015-2019 for Pakistan is designed to support
the government in improving connectivity, productivity, and access to markets and
public services. It has a provisional assistance package of at least $1.2 billion a year on
average, which will focus on infrastructure upgrades and institutional reforms.
Assistance will target six sectors: energy; transport; agriculture, natural resources and
rural development; water and other urban infrastructure and services; public sector
management; and the finance sector. The bulk of the assistance is earmarked for
infrastructure improvements in the power, transport, agriculture, and urban services
sectors.
 The country operations business plan (COBP) 2018-2020 of ADB for Pakistan is
aligned with ADB’s country partnership strategy, 2015-2019, which supports the
Government of Pakistan’s objective of high, sustained, and inclusive growth.
 The Access to Information Policy recognizes that transparency and accountability are
essential to development effectiveness. It establishes the disclosure requirements for
documents and information ADB produces or requires to be produced.
Partnership strategy
(continued….)
 The Accountability Mechanism provides a forum where people adversely
affected by ADB-assisted projects can voice and seek solutions to their
problems and report alleged noncompliance of ADB's operational policies
and procedures.
 In preparing any country program or strategy, financing any project, or by
making any designation of, or reference to, a particular territory or
geographic area in this document, the Asian Development Bank does not
intend to make any judgments as to the legal or other status of any territory
or area.
Pakistan seeks $500million loan from ADB
 Pakistan has requested the Asian Development Bank (ADB) to approve a
$500 million loan in budgetary support before June this year, as it faces
difficulties in retaining foreign exchange reserves because of mounting
external financing needs.
 The request has been made to Werner Liepach, director general for Central
and West Asia Department of the ADB, who is on a visit to Pakistan, a top
official of the Finance Ministry
 The ADB official arrived in Pakistan 12 days before a scheduled visit of the
International Monetary Fund’s (IMF) new mission chief. Spanish born IMF
mission chief is arriving on 26th of this month on his maiden visit to
Pakistan, where he will stay for two days
 ADB says it will not finance CPEC projects
 Pakistan plans to request the IMF to send a staff level mission after the IMF-World
Bank spring meetings next month, said a senior Finance Ministry official. If an
agreement reached during staff level visit, the government will present the next
year’s budget on May 17 to include prior actions of a programme loan
 Liepach met Finance Minister Asad Umar, Adviser to PM on Commerce Razak
Dawood besides holding meetings with other key government officials.
 His visit is aimed at finding new avenues for enhancing disbursements of loans to
Pakistan and removing bottlenecks that are hindering releases of the previously
approved loans.
 However, it is unlikely that the Manila-based lending agency would accept the
request in absence of a Letter of Comfort from the IMF. Pakistan’s budgetary
support remains suspended for last over two years due to deterioration in
macroeconomic conditions.
ISLAMIC DEVELOPMENT BANK
 The Islamic Development Bank is a multilateral development bank (MDB), working to improve the
lives of those we serve by promoting social and economic development in Member countries and
Muslim communities worldwide, delivering impact at scale.
 We provide the infrastructure to enable people to lead better lives and achieve their full potential.
Origin:
 The Islamic Development Bank (IDB) (Arabic: ) ‫البنك اإلسالمي للتنمية‬is a multilateral development
financing institution located in Jeddah, Saudi Arabia.
 It was founded in 1973 by the Finance Ministers at the first Organization of the Islamic Conference
(now called the Organisation of Islamic Cooperation) with the support of the king of Saudi Arabia
at the time (Faisal), and began its activities on 3 April 1975. There are 57 shareholding member
states.
 On the 22 May 2013, IDB tripled its authorized capital to $150 billion to better serve Muslims in
member and non-member countries. The Bank has received credit ratings of AAA from Standard &
Poor's, Moody's, and Fitch. Saudi Arabia holds about one quarter of the bank's paid up capital. The
IDB is an observer at the United Nations General Assembly.
VISION and MISSION
Vision
 International Development Bank for trade and finance to be the first choice for customers wishing
to deal with a conclusive financial institution in providing high quality banking products and
services on a local and international level through innovation and IT solutions.
Mission
 We believe all people have the right to live in dignity and prosperity, and that nurturing economic
growth is the best route out of poverty.
 We equip people to drive their own economic and social progress at scale, putting the infrastructure
in place to enable them to fulfil their potential.
 We build collaborative partnerships between communities and nations, across the public and
private sectors.
 We foster innovative and sustainable solutions to the world’s greatest development challenges, as
we work towards the UN Sustainable Development Goals
President of IDB
 The Islamic Development Bank (IDB) will elect a new president next week during its
annual meeting to be held in Jakarta, replacing long-serving President Ahmad Mohamed
Ali, the Jeddah-based multilateral lender said late on Thursday.
 Saudi Arabia, the IDB’s largest shareholder, has nominated former Haj Minister Bandar
Hajjar for the post, whose candidacy was endorsed by the outgoing IDB president.
 The incomer will have big shoes to fill: Ali is widely regarded in the industry having led
the AAA-rated IDB since 1975, overseeing expansion of its economic development
activities across its 56 member countries.
 During his tenure the IDB tripled its authorised capital to $150 billion in 2013 and last
year up-sized its flagship Islamic bonds (sukuk) issuance programme to $25 billion.
 The nomination of Bandar Hajjar could be a test for Iran, the IDB’s third largest
shareholder, as Tehran and Riyadh trade blame over a failure to agree on organizational
details for the annual haj pilgrimage to Saudi Arabia.
Activities of the Group
 IDB Group is engaged in a wide range of specialized and integrated activities such as:
 Project financing in the public and private sectors;
 Development assistance for poverty alleviation;
 Technical assistance for capacity-building;
 Economic and trade cooperation among member countries;
 Trade financing;
 SME financing;
 Resource mobilization;
 Direct equity investment in Islamic financial institutions;
 Insurance and reinsurance coverage for investment and export credit;
 Research and training programs in Islamic economics and banking;
 Awqaf investment and financing;
 Special assistance and scholarships for member countries and Muslim communities in non-member
countries;
 Emergency relief; and
 Advisory services for public and private entities in member countries.