In a Landmark resolution, ADB Governors agreed to amend bank charter to remove lending limitation set out in Article 12.1

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In a landmark mark decision, The Asian Development Bank ( ADB ) Governors passed a resolution to amend Bank charter to remove lending limitation set out in Article 12.1.

This amendment will open the road to increase lending limit of bank by 50%.

This is the first amendment to the ADB Charter since the institution was created in 1966 and will enter into force three months after ADB officially notifies its members that the amendment has been adopted.

Procedure to amend Bank Charter:

Relevant article related to amendment of charter are as follows.

Chapter IX

AMENDMENTS, INTERPRETATION, ARBITRATION

Article 59

AMENDMENTS

1. This Agreement may be amended only by a resolution of the Board of Governors approved by a vote of two-thirds of the total number of Governors, representing not less than three-fourths of the total voting power of the members.

2. Notwithstanding the provisions of paragraph 1 of this Article, the unanimous agreement of the Board of Governors shall be required for the approval of any amendment modifying:

(i) the right to withdraw from the Bank;

(ii) the limitations on liability provided in paragraphs 6 and 7 of Article 5; and

(iii) the rights pertaining to purchase of capital stock provided in paragraph 2 of Article 5. 3. Any proposal to amend this Agreement, whether emanating from a member or the Board of Directors, shall be communicated to the Chairman of the Board of Governors, who shall bring the proposal before the Board of Governors. When an amendment has been adopted, the Bank shall so certify in an official communication addressed to all members. Amendments shall enter into force for all members three (3) months after the date of the official communication unless the Board of Governors specifies therein a different period.

Election of President:

Procedure laid down in charter:

Article 34

THE PRESIDENT

1. The Board of Governors, by a vote of a majority of the total number of Governors, representing not less than a majority of the total voting power of the members, shall elect a president of the Bank. He shall be a national of a regional member country. The President, while holding office, shall not be a Governor or a Director or an alternate for either.

2. The term of office of the President shall be five (5) years. He may be re-elected. He shall, however, cease to hold office when the Board of Governors so decides by a vote of two-thirds of the total number of Governors, representing not less than two-thirds of the total voting power of the members. ……..

3. The President shall be Chairman of the Board of Directors but shall have no vote, except a deciding vote in case of an equal division. He may participate in meetings of the Board of Governors but shall not vote.

4. The President shall be the legal representative of the Bank.

5. The President shall be chief of the staff of the Bank and shall conduct, under the direction of the Board of Directors, the current business of the Bank. He shall be responsible for the organization, appointment and dismissal of the officers and staff in accordance with regulations adopted by the Board of Directors.

6. In appointing the officers and staff, the President shall, subject to the paramount importance of securing the highest standards of efficiency and technical competence, pay due regard to the recruitment of personnel on as wide a regional geographical basis as possible.

Dominance of Japan on ADB Presidency:

As of 31 December 2024 ( Page No. 69, ASIAN DEVELOPMENT BANKANNUAL REPORT 2024 ) , largest shareholders of bank Japan and USA have a voting power of 12.747% each.

China, the second largest shareholder had a voting power of had a voting power of 5.437%

India had a voting power of 5.347.

Western nations including USA, UK and their allies in Asia and Asia – Pacific hold nearly 65% of total voting power.

Due to mutual understanding with Western Nations, by virtue of total voting power, Person nominated by Japan always secures required vote to become President of Bank.    

  1. ADB News
  2. AGREEMENT ESTABLISHING THE ASIAN DEVELOPMENT BANK
  3. ASIAN DEVELOPMENT BANK ANNUAL REPORT 2024
  4. CNBC
  5. The Guardian

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