ADB, IFC to infuse $1 billion each to fund development

India will remain a focus area for multilateral lending institutions — like Asian Development Bank (ADB) and International Finance corporation (IFC), the private financing arm of World Bank — on expectation that the recovery in the Asian markets will be faster than the rest of the world.

For instance, IFC is expected to invest about $1 billion in Indian markets this year, covering 30-odd projects. Last year, IFC’s investment in India was close to $1 billion, with cumulative committed portfolio over the last few years of close to $3.5billion as on March 2010.

Of this, about 20 per cent investments would be in equity and the rest on debt, said Thomas S Davenport, senior manager, IFC. He was speaking at a seminar on financial inclusion organised by the Bengal Chamber of Commerce and Industry.

The focus areas for IFC would be Bihar, Jharkhand, Orissa, Rajasthan, Madhya Pradesh, Chhattisgarh, Uttar Pradesh and the North Eastern states, he added.

“At present, our investment in these states is close to 20 per cent, but in the next two to three years, we want to increase it to 50 per cent. Connecting the base of the pyramid to the market and formalising the private sector will be our focus areas,” he said. IFC will invest in areas like low-cost housing projects and financial inclusion through channels like e-payments. It is also collaborating with Dewar’s Housing for the under-served segment.

In the North-east, IFC started operations in 2004 by supporting tea plantations and the cement industry.

ADB is also likely to be a major source of funds for states like Andhra Pradesh, Bihar, Rajasthan, Madhya Pradesh and Maharashtra for development projects. Under the rural cooperative credit restructuring and development programme, approved in 2006, ADB has sanctioned $1 billion in the five states, out of which $500 million has already been released.