India’s ruling coalition – the National Democratic Alliance (NDA) – has halted plans for establishing a SAARC Development Bank, Indian media reports.
Although the previous government’s proposal to establish the bank was endorsed by the 18th SAARC Summit in November, an Indian external affairs official was quoted as saying that feasibility studies had suggested it was an inappropriate time to establish the bank.
“We studied the contributions that can be made by other multilateral institutions, funding that can be sourced through external commercial borrowing route, but the shortfall after that is still huge. Ultimately, that shortfall has to be borne by India. So we decided to explore alternatives available,” said the unnamed official.
Meanwhile Indian Prime Minister Narendra Modi is reported to have submitted an “alternative proposal”, which his government is now working on. Modi has been a strong advocate of greater regional integration since assuming office, being seen as the driving force behind the resumption of the SAARC summit after a three-year hiatus.
The South Asian Association for Regional Cooperation comprises of Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, and Sri Lanka.