India to seek $5.2 billion World Bank loan for financial sector

04 April 2009

India is planning to go for a $5.2 billion loan from the World Bank for its financial sector and infrastructure projects, officials said on Friday.

India normally gets assistance worth $3 billion from the World Bank annually, of which half is given in concessional form.

The main component of this loan will be used for recapitalisation of public sector banks (PSBs) over the next two to three years. The rest will be used to restructure infrastructure finance companies, and power grid corporations, he added.

At the G20 summit in London, Indian prime minister Manmohan Singh was assured by the leaders that developing countries like India will have a higher voting right in institutions such as the International Monetary Fund (IMF) and the World Bank.

The prime minister had earlier said that India was willing to increase its contribution to the IMF but does not intend to borrow any money from the agency, adding that India consider contribution to IMF in proportion to its quota. (See: India willing to increase contribution to IMF: Manmohan).

When asked whether India is planning to withdraw funds from the new facility approved at the G-20 Summit, Singh said "We do not visualise any need in the near future to go to the IMF ... We can consider contribution to IMF in proportion to our quota."