President Joe Biden on Thursday nominated Indian American Ajay Banga to head the World Bank with a mandate to promote climate change policies and take into account the perspectives of developing countries. There are already two senior officials of Indian origin at the World Bank, Chief Financial Officer Anshula Kant and Chief Economist Indermit Gill. And, at the International Monetary Fund, Gita Gopinath is the second-highest official as the first managing director.

Growing up in India,  the former MasterCard chief has a “unique perspective” on the challenges facing developing countries and is “uniquely qualified” to be the president of the international financial institution in this “critical moment in history".

Biden said, “Raised in India, Ajay has a unique perspective on the opportunities and challenges facing developing countries and how the World Bank can deliver on its ambitious agenda to reduce poverty and expand prosperity”. Banga serves as co-chair with Vice President Kamala Harris, also of Indian origin, of Partnership for Central America, an initiative to get private companies to participate in developing that region.

If confirmed by the bank’s board, Banga will succeed the current president David Malpass who said last week that he was resigning with effect from June, with nearly a year to go in his five-year term.

Climate change will be priority

Since the World Bank’s inception in 1944, Banga will be the second person of Asian descent to head it after Jim Yong Kim whose tenure was from 2012 to 2019.

Like other presidents, they are American citizens since the spot is traditionally reserved for nationals of that country, which holds nearly 16 per cent of the voting power based on its contribution. US presidents make the nominations, even though theoretically any other country can put up candidates.

A priority for Biden is fighting climate change, which he has emphasised across all areas and Malpass, appointed by former President Donald Trump, was seen as a reluctant warrior.The World Bank has been criticised for financing oil and gas projects and US Treasury Secretary Janet Yellen reportedly had goaded him to speed up changes that would emphasise climate change.

Banga, “has critical experience mobilizing public-private resources to tackle the most urgent challenges of our time, including climate change”, Biden said. In Banga, Biden sees an ally in promoting climate-friendly policies that will require the World Bank to make it a priority in its lending activities.

While heading MasterCard, Banga created with other business leaders the “Priceless Planet Coalition” which seeks to boost climate-friendly investments. He will be expected to drive the World Bank’s Climate Change Action Plan 2021–2025 based on the GRID approach – Green, Resilient, and Inclusive Development.

This plan, which pursues poverty eradication with sustainability, supports government and private sector clients in climate change adaptation and resilience and reducing greenhouse gas emissions.

The World Bank unveiled last month a proposal to increase its capital to help its push in areas like climate change and the United National Sustainable Development Goals., which Banga will have to pilot.

Indian American in global leadership role

M R Rangaswami, the founder and chairman of Indiaspora, said, “Especially relevant, given recent commentary around the Bank’s mission and objectives, is that Ajay brings a sharp focus on climate resiliency and environmental sustainability. In nominating him to this position, the President has made an inspired choice.”

“It is great to see such an eminently qualified Indian-American nominated for this prestigious international leadership role”, he added. 

“Ajay Banga’s global private sector background, during which he initiated and led Mastercard’s financial inclusion efforts, will be of immense value in enhancing his effectiveness as World Bank president”, said Indiaspora’s Executive Director Sanjeev Joshipura.

Rajwant Singh, the global president of EcoSikh, said that Banga’s nomination to head the World Bank “is a positive development for the global community conscious about the impact of climate change on the planet”. 

His ability to mobilise public-private resources to address the most pressing issues of our times including climate change was the top factor that prompted US President Joe Biden to announce his nomination for the role."

“With Banga at the helm of the institution, the climate agenda is expected to be at the centre stage and we will hopefully see it becoming more active in the functioning of the bank along with an increase in the credit available for the countries around the world to switch towards green energy”, he added.

A Sikh visible in his turban

EcoSikh brings the values of Sikhism to the mission of protecting the environment.

The 189-member World Bank operates through five institutions, the International Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation, the Multinational Investment Guarantee Agency and the International Centre for Settlement of Disputes.

From its initial mission after World War II focused on making loans to devastated European countries it has evolved to include health, education, good governance and the environment in its scope. In 1948 it widened its scope and began financing infrastructure projects in energy, agriculture and transportation in low and middle income countries.

By the 1970s it expanded its mission to broader development taking sectors like health, education, environment and rural development. In the 1990s it assumed arguably political roles of conflict prevention, post-conflict reconstruction, and assistance for countries after major political change. It also began to emphasise good governance and fighting corruption.

During the Covid pandemic, the Bank allocated about $10 billion for providing vaccines.

Ajaypal Singh Banga, whose turban marked his Sikhism in gatherings of the highest echelons of US and international business, was born in Pune in western India to a family that has roots in Jalandhar in Punjab. He received his bachelor’s degree from St Stephens College in Delhi and a postgraduate qualification in management from the Indian Institute of Management in Ahmedabad. He had worked for Nestle, PepsiCo and CitiBank before landing at MasterCard, where he worked his way up from chief operating officer, to president and chief executive officer, and finally to executive chairman.

After more than a decade at MasterCard, he joined the equity firm General Atlantic as vice chairman.

(The author is Nonresident Fellow, Society for Policy Studies. Views are personal. He can reached at arulouis@yahoo.com)