Functions of the ADB:

ADB finances principally specific projects in the region. It may make loans to or invest in the projects concerned. It may also guarantee loans granted to the projects. Most of the loans granted are hard loans or tied loans. However, loans from special funds set aside by the ADB upto 10 per cent of its paid-up capital are granted under soft loan term for which purpose it has set up a separate window known as the Asian Development Fund (ADF). Soft loans are normally granted to projects of high development priority requiring longer periods of repayment with lower rates of interest. ADB normally finances foreign exchange cost of the project and the loan is repayable in the currency in which it is made.