 "MD & CEO of ICICI Bank Chanda Kochhar and President of New Development Bank K V Kamath during a MoU signing ceremony between the two bank in Mumbai")
On Thursday, the two lenders announced they have signed a Memorandum of Understand (MoU) according to which they would consider each other as “preferred partners” to work in the aforementioned areas.
The lenders said this MoU would help NDB in exploring bond issuance opportunities in the Indian and international bond markets, particularly in rupee-denominated bonds.
BRICS NDB won’t be the first multi-lateral funding agency that is looking at tapping the rupee-denominated bond market. Recently, IFC, part of the World Bank group, also raised about Rs 180 crore by issuing rupee-denominated 'Maharaja' bonds.
Apart from this, the two lenders will also be working together to fund development projects in the country. In fact, in 2014, the leaders of the BRICS (Brazil, Russia, India, China and South Africa) countries had decided to establish NDB with the intention to fund infrastructure projects.
“Our mandate prescribes partnering with local development banks in member countries and this MoU will enable NDB to leverage the deep market access and insight of ICICI Bank in India's financial markets. As partners, we look forward to an efficient client and market development that will enable us to enhance our long-tenor financial assistance in India,” said Kamath, NDB president.
Another area where the two banks will be collaborating will be around treasury risk management, account and cash management services and human resource development. However, the banks failed to divulge more details on the nature of partnership or the financial transactions between the two that will be a result of this collaboration.
"This partnership will give both parties an opportunity to work together and leverage their respective strengths in the areas of resource raising, development finance and treasury risk management in a mutually beneficial manner," said Chanda Kochhar, MD & CEO, ICICI Bank.
Prior to taking over the head of NDB Bank, Kamath was the non-executive chairman of ICICI Bank till last year.
NDB has already inked a similar pact with BNDES Bank of Brazil. Last month (in April 2016) newly established BRICS New Development Bank granted a $250 million funding to Canara Bank for a renewable energy project. The China-based NDB has approved four green renewable energy projects from India, China, Brazil and South Africa entailing Bank financing of $811 million.
The project from India entails provisioning of a multi-tranche loan of $250 million to Canara Bank for lending to renewable energy ventures. The project will result in generation of 500 MWs of renewable energy and savings of about 800,000 tonnes of carbon emissions.
