India to join multilateral lender EBRD

India to join multilateral lender EBRD

Context:

• India to join multilateral lender EBRD

Introduction:

• European Bank of Reconstruction and Development shareholders approve its entry as 69th member.
• EBRD’s board of governors, which represents all the existing shareholders of the UK-based bank, voted in favour of India’s membership application last week

Significance of this decision:

• This is an important step in the relationship between the EBRD and India.
• It will allow the EBRD to build on already close ties with India.
• The move will enable Indian companies to undertake joint investments in regions in which the EBRD operates.
• The move will see India take up a small stake in the bank, would spur further investment by Indian firms in a range of sectors from solar to utilities, providing them access to fast growing markets.
• It will also enable Indian citizens to work for the organisation.

European Bank of Reconstruction and Development

• The London-headquartered EBRD is a multilateral development bank set up in 1991 after the fall of the Berlin wall to promote private and entrepreneurial initiative in emerging Europe.
• It invests in 38 emerging economies across three continents, according to a set of criteria that aim to make its countries more competitive, better governed, greener, more inclusive, more resilient and more integrated.
• It remains committed to furthering the development of “market-oriented economies and the promotion of private and entrepreneurial initiative.”
• Other members who receive investments include Mongolia, Turkey, Egypt, Cyprus, Greece and Lebanon, among a total of 38 member states.
• Others including China, the U.S., U.K., and France are stakeholders, whose companies are able to invest in EBRD projects, but do not receive financing for domestic projects.
• The EBRD’s largest shareholder is currently the U.S., while other G7 nations also hold significant stakes.
• In 2017, the EBRD signed a pact with the International Solar Alliance, which was unveiled in 2015 in Paris.