With India becoming the 69th member of the organisation, it becomes imperative for us to understand the history and structure of the organisation. We will also understand the impact the newly gained membership has on India and future of the mutual benefits.
For a developing country like India facing multiple economic crises like poverty, unemployment, hunger, and structural weaknesses like ever widening Non-Performing Assets (NPAs), it is of huge attention when India becomes member of any economic organisation, in this case, EBRD.
Commitment to entrepreneurship:
The EBRD is committed to furthering progress towards ‘market-oriented economies and the promotion of private and entrepreneurial initiative’. This has been its guiding principle since its creation at the beginning of the 1990s and, new challenges and the welcoming of new countries to the EBRD world notwithstanding, will continue to be its mission in years to come.
A turning point in the history of Europe:
The EBRD was set up in haste to meet the challenge of an extraordinary moment in Europe’s history, the collapse of communism in its East. In fact, a mere 18 months elapsed between the first mooting of the idea of a European development bank, by President François Mitterrand of France, in October 1989 and its opening for business with headquarters in London in April 1991.
Urgency and the ability to respond to momentous events swiftly and decisively, whether it be the end of the Soviet Union, financial crises or the ‘Arab Uprising,’ have been among the EBRD’s hallmarks from the start.
A unique mandate:
Safeguarding the environment and a commitment to sustainable energy are also central to the EBRD’s activity. A commitment to promote ‘environmentally sound and sustainable development’ was made explicit at its founding. More recently, its Green Economy Transition approach has made climate finance a key measure of the Bank’s performance. In 2017 such finance accounted for 43 per cent of its total annual investment.
During the frenetic years of the early 1990s, the EBRD’s emphasis on the private sector as the main driver for change in Central and Eastern Europe was vindicated many times over. This was the period that established the EBRD’s reputation as an expert on transition to the open market.
It was heavily involved in areas such as banking systems reform, the liberalisation of prices, privatisation (legalisation and policy dialogue) and the creation of proper legal frameworks for property rights, all vital ingredients for change.
Structure: (please refer the picture below)
The EBRD organisational chart illustrates the Bank's internal structure.
Each shareholder is represented individually on the Board of Governors of the EBRD which has overall authority over the Bank. The Board of Governors has delegated the exercise of most of its powers to the Board of Directors.
However, it remains solely responsible for determining membership to the Bank, changes in capital stock, appointment of Directors and the President of the Bank and decisions around financial statements and determining reserves and allocation of profits.
Election of President:
The Board of Governors elect the President. The Governors represent all the EBRD’s shareholders.
The outcome of the election was decided by secret ballot.
The winning candidate has to receive the votes of a simple majority of the total members as well as 50 percent + 1 of shareholders’ weighted votes.
India as a member:
With the country's impressive economic growth over the years and enhanced international political profile, it was considered appropriate that India should expand its presence on the global developmental landscape beyond its association with the Multi-lateral Development Banks (MDBs) such as the World Bank, Asian Development Bank and African Development Bank.
The minimum initial investment towards the membership of EBRD will be approximately €1 (one) million.
The membership has set the stage for an increase in joint investment with Indian companies in the EBRD’s regions.
India will take a shareholding in the EBRD but it will not be a recipient of EBRD financing.
This would contribute to an improved investment climate in the country.
The membership of EBRD would enhance the competitive strength of the Indian firms, and provide an enhanced access to international markets in terms of business opportunities, procurement activities, consultancy assignments etc.
This would open up new vistas for Indian professionals on the one hand, and give a fillip to Indian exports on the other.
Increased economic activities would have the employment generating potential.
The total value of joint India-EBRD investments in EBRD economies stands at €982 million (as in March 2018), with the majority of the transactions in the private sector.
The EBRD also works closely with leading Indian chambers such as the Confederation of Indian Industry, and the Associated Chambers of Commerce and Industry of India. It recently signed a Memorandum of Understanding with the Federation of Indian Chambers of Commerce and Industry.
In 2017, the EBRD signed an accord to strengthen ties with the International Solar Alliance, which was launched during the 2015 UN Climate Change Conference in Paris at the initiative of Indian Prime Minister Narendra Modi and former French President François Hollande as a platform for cooperation among solar resource-rich economies.