India needs large infra funds, says WB president on BRICS bank

Outgoing World Bank President Robert Zoellick today said he would back the proposed BRICS bank desired by the five member grouping for various reasons including large infrastructure demand by India.

The bank chief said he favoured his organisation working with such a lending agency as with any other development bank.

Answering questions at the Boao Forum for Asia in China's Hainan province on the plans of BRICS countries--Brazil, Russia, India, China and South Africa-- to have a bank of their own, Zoellick said it is still to be finalised by the Finance Ministers of the five nation bloc.

"It's still at the stage where the Finance Ministers are analysing it to go forward.  As a general principle, my view would be, if the countries want to develop it, then we should work with it," he said, according to the transcript circulated to the media by the World Bank.

He said it is important to understand what was driving countries like, Brazil, Russia, India, China and South Africa, (BRICS) to for a Bank of their own.

"People often jump to an issue and they don't step back and think about what's driving it. In India it's very much a concern that they want more multilateral financing.  Their needs for infrastructure financing are very great," he said.

"They've drawn on the Bank support over years.  I think our total outstandings are about USD 38 billion from different sources in India.

"Frankly, we've been somewhat limited about what we can do in India going forward, in part because our share holders say, well, you don't want too much to one country and so on and so forth," he said.

"I've actually tried to push against that. I increased the single borrowing limit for India, and I'm trying to look for innovative ways we can leverage our financing with guarantees and others.

On China he said: "My guess is, in China, obviously it's (the reason for the proposed bank) not so much a financing vehicle. It may be a way to further internationalise their Renminbi (currency) and transactions to be supportive of other countries," he said.

"But it's important to recognise if you can't serve the country effectively, well then, they're going to look elsewhere," he said.

Stating that BRICS will face problems such who will head the proposed bank, he said it will help China to further internationalise its currency.

"Now I have to say, forming a bank is not an easy venture. So there'll be some sensitive issues as to who the President of the Bank is, and where it's located, and where the capital will be. It will have to get a rating. We have a AAA rating, which influences your overall financing," he said.

"So those will be issues that'll have to be worked out. But, at least my political economic philosophy for the World Bank is, we should be open to work with any we can and it's based on this idea.

"If others can bring capital, if others can bring knowledge, and we work with foundations ?" and we should figure out in some ways to support them, and there's other ways we can be a catalyst," he said.

On the BRICS Bank he said, "We work with the regional development banks, I actually created a series of partnerships with the Islamic Development Bank, the Arab Development Bank, and those institutions were probably more like the BRICS bank in they'd probably be more of a financing vehicle than a knowledge and experience vehicle".

He said World Bank also works with NGOs, private sector and other institutions.