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With the South Asian Association for Regional Cooperation (SAARC) summit slated to be held in Kathmandu this month, talk of a regional financial institution for the organisation’s eight members have been gathering pace. On Thursday, Ajith Nivard Cabraal, Governor of Sri Lanka’s Central Bank, stated that he was optimistic about a favourable outcome on the question of a SAARC Development Bank at the summit which will be held on November 26-27.
“We’ve (Sri Lanka) supported it from when it was first mooted, I certainly hope to see a positive result in Kathmandu. It’s finally up to the leaders but I believe it will yield positive results for the region,” said Cabraal, on the sidelines of an India Economic Summit session, co-organised by the World Economic Forum and the Confederation of Indian Industry.
Business Line had reported earlier that India had been exploring the creation of an Exim Bank window to fund infrastructure projects in South Asia. The idea, along the lines of the $100 million BRICS New Development Bank, had been proposed by India at a ministerial meeting in Bhutan in July to finance low-cost infrastructure projects in the region.
Inclusive finance
On the question of a consensus, Cabraal said, “The important thing is that the line of thinking is similar in the region and a lot of gravity is being placed on it to move forward because of the synergies it can create,” he added.
Besides infrastructure, he told Business Line that the Bank could further poverty alleviation through inclusive finance. The World Bank estimates 24.5 per cent of the region’s population living below the poverty line.
“It must have a certain objective even if priorities keep changing with time. It should be used to further financial inclusion with the Bank being provided with block loans that should be redistributed among poorer segments through microfinance. It’s time this regional problem was looked at in depth and have the Bank committed to prosperity in the region,” the Governor told Business Line.
SAARC, formed in 1985, comprises of Afghanistan, Pakistan, Nepal, Bhutan, Bangladesh, Sri Lanka, Maldives and India. At present, it is estimated that intra-regional trade stands at about five per cent of total trade engaged in by the member nations and a SAARC Development Bank, it is believed, would boost that figure through trade necessitated by development projects.
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