India has become the 69th shareholder of the European Bank for Reconstruction and Development (EBRD). This has a lot of potential for Indian companies as it will open up opportunities for them in places such as Central Asia, Turkey and Georgia.
The European Bank for Reconstruction and Development (EBRD) is an international financial institution founded in 1991. As a multilateral developmental investment bank, the EBRD uses investment as a tool to build market economies. Initially focused on the countries of the former Eastern Bloc it expanded to support development in more than 30 countries from central Europe to central Asia.
Similar to other multilateral development banks, the EBRD has members from all over the world, with the biggest shareholder being the United States, but only lends regionally in its countries of operations. Headquartered in London, the EBRD is owned by 69 countries and two EU institutions, 69th being India recently in July 2018. Despite its public sector shareholders, it invests in private enterprises, together with commercial partners.
EBRD cannot finance projects in India as it is not a country of operation.
The membership also gives businesses, and the government, access to information such as market analysis, country strategies and reports on the political economy of different countries. This is of great value to businesses for planning long-term investments.
Further, investing with EBRD in these countries makes the investments safer. It provides protection as the countries where we are operating are also our members.
India will not become a country of operation. It has just become a member. It is up to the Indian government to decide on that and take it up with the other shareholders.
But as a member, there is much that Indian companies can do, especially in regions such as Central Asia and Turkey. These are markets that India has just begun to penetrate. There are huge opportunities for Indians to go there.
The following countries are recipients of funds: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Estonia, Egypt, Georgia, Greece, Hungary, Jordan, Kazakhstan, Kosovo, Kyrgyzstan, Latvia, Lithuania, Macedonia, Moldova, Mongolia, Montenegro, Morocco, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Tajikistan, Tunisia, Turkey, Turkmenistan, Ukraine and Uzbekistan.
The EBRD publishes its tenders and contracts on its own website and in Development Business. a publication launched in 1978 by the United Nations with the World Bank and other development banks.
The following countries contribute in financing the EBRD: Australia, Austria, Belgium, Canada, China, Cyprus, Czech Republic (receiving member until 2007-12-31), Denmark, Egypt, Finland, France, Germany, Greece, Iceland, Ireland, Israel, Italy, India, Japan, Luxembourg, Malta, Mexico, Morocco, Netherlands, New Zealand, Norway, Portugal, South Korea, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States of America as well as the European Union and the European Investment Bank.
The EBRD is not to be confused with the European Investment Bank (EIB), which is owned by EU member states and is used to support EU policy. EBRD is also distinct from the Council of Europe Development Bank (CEB).
The following presidents have served the EBRD to date.
Jacques Attali (1991–1993)
Jacques de Larosière (1993–1998)
Horst Köhler (1998–2000)
Jean Lemierre (2000–2008)
Thomas Mirow (2008–2012)
Suma Chakrabarti (2012– present)
The EBRD offers loan and equity finance, guarantees, leasing facilities, trade finance, and professional development through support programs. Direct investments in equity range from 5% to 25% stakes and €5 million to €230 million. Smaller projects are financed both directly by the EBRD and through “financial intermediaries”.
The EBRD has helped finance over 1 million smaller projects by supporting local commercial banks, micro-business banks, equity funds and leasing facilities.
To be eligible for EBRD funding, “a project must be located in an EBRD country of operations, have strong commercial prospects, involve significant equity contributions in-cash or in-kind from the project sponsor, benefit the local economy and help develop the private sector and satisfy banking and environmental standards.”