Hyderabad: The ADB today virtually rejected Finance Minister P Chidambaram's demand to reduce its lending rates to pre-2000 level, saying the interest rates on its loans are "extremely low".
"We lend at about LIBOR+10, which is extremely low when explained in the long term nature of these loans," Asian Development Bank President Haruhiko Kuroda told reporters here.
Earlier in the day, Chidambaram had asked the Manila-based ADB to reduce its loan charges to the levels prevailing before year 2000, saying financial parameters of the bank had been robust and cost of funds were critical to its business.
To a question on the Finance Minister's suggestion, Kuroda said because of strong financial conditions of the bank, it had reduced charges on loans by lowering cost of funds in many ways.
Chidambaram, who is also the chairman of the ADB's board of governors, said the commitment fee should either be eliminated or substantially reduced through improvements in operations and internal efficiency of the bank.
Kuroda said ADB's lending had some borrowing cost, including interest payment and commitment fee.
He said since the bank's lending was based on London Inter Bank Offer Rate (LIBOR), interest rates fluctuate on the basis of market rates.
"We could borrow at very low rates, and adding administrative costs to that, we lend. The bank's lending rates are very low," he said.
Comments
0 comment